Fiera CEO Says Market Bottom Close; Canada Stocks to Outperformby
Aims to double assets to $143 billion in the next five years
S&P/TSX will outpace U.S. markets this year, jump 15% he says
Fiera Capital Corp. Chief Executive Officer Jean-Guy Desjardins sees plenty of buying opportunities in a Canadian market battered by oil prices, which will help the Montreal asset manager’s goal to double its assets to C$200 billion ($143 billion) by 2020.
“I think we are close to a bottom in markets,” Desjardins said in an interview after an event at the Toronto Region Board of Trade. “When I say things like that obviously it goes against the grain and overwhelming psychology right now which is quite negative. To me, there are opportunities to invest.”
Canada’s benchmark Standard & Poor’s/TSX Composite Index, one of the worst-performing developed markets in the world last year, will outpace its U.S. peer S&P 500 and rebound to at least a 15 percent gain this year in anticipation of a rebound in the Canadian economy the following year, Desjardins said. The Canadian equity gauge is down 7.4 percent this year.
“That scenario is given oil prices rebound,” he said. “If I’m right in oil prices, we will boom in 2017.”
With oil slumping another 27 percent this year and now trading near a 12-year low, risks of further declines are far outweighed by the potential upside in a rebound, Desjardins said. Coupled with what he expects will be a stimulative federal budget from Prime Minister Justin Trudeau and continued low interest rates, the Canadian economy will get a spark, Desjardins said.
As for Fiera, the company is forecasting “conservative” 5 percent annual growth in its basket of equities, fixed income and alternative investments over the next five years, Desjardins said. Add additional new business and Fiera will need to make strategic acquisitions to gain about C$25 billion in assets to reach its goal of doubling assets, he said.
The firm’s assets under management have grown to about C$101.4 billion as of December, with about half from institutional investors, compared with C$86.6 billion a year ago, according to company data. Fiera most recently raised its dividend in August and has done so regularly since 2013, according to data compiled by Bloomberg. Desjardins founded Fiera in 2003 after selling TAL Global Asset Management to Canadian Imperial Bank of Commerce.
Shares of Fiera dropped 3.7 percent to the lowest level since 2013 at 2:45 p.m. in Toronto and are down down 26 percent in the past 12 months. The S&P/TSX Financials Index has lost 15 percent in the same period amid a broader market selloff.
While the drop in the Canadian dollar has limited Fiera’s aggressiveness in bidding for foreign acquisitions, the company is still on the hunt, Desjardins said. The most important consideration when making acquisitions is the talent the company can absorb, he said.
“We have a list of investment-management capabilities we don’t have,” he said. “For example, emerging market equities.”
The asset manager expanded its reach outside Canada’s borders last year, including a distribution partnership with Nissay Asset Management Corp. in November to enter the Japanese market and a $33.5 million deal to buy New York-based Samson Capital Advisors announced last February.