Morgan Meighen & Associates
The market has seen significant change since The Right Honourable Arthur Meighen co-founded Third Canadian General Investment Trust Limited in 1928. Shortly after in 1930, Canadian General Investments Limited was created. Yet, nearly a century later, one of the things that has propelled Morgan Meighen & Associates towards amassing $1.6 billion in assets under management for private clients, institutional clients and closed-end fund investors is their passion and commitment for offering their clients and investors personal service and customized investment management.
Morgan Meighen & Associates is driven by integrity, objectivity and independence that separate them in the financial world. “Canadian General Investments isn’t an operating company but rather, a fund managed by Morgan Meighen that has truly participated in the growth of Canada during the industrialization from a rural to a 21st century economy,” says Jonathan A. Morgan, Executive Vice-President. “Along the way things changed. Originally, there wasn’t much of a stock market here in Toronto and there wasn’t even a stock market index when we started. When the fund was launched it was very much a way for British investors to invest into this new emerging market of Canada. That relationship has persisted and since the 1990’s it has been renewed and now about half of the free float is held by European and British investors.”
As for shareholders in Canadian General, Morgan Meighen & Associates stay on point, talking to brokers, their investment advisors here in Canada and the UK and commission research reports to be written on them. “In the end, it’s really up to the investors to find us and to recognize the value that can be found in a vehicle like Canadian General on the stock market,” says Morgan. Many of their investors, particularly in Canada, are self-directed investors in Canadian General because they don’t pay fees and commissions that other funds have traditionally been paying to brokers which are now starting to become more apparent to the general investing public.
“As a mid-sized investment manager, managing $1.6 billion, we are well positioned in terms of the fact that we’re big enough to have access to deal flow, management teams and research but we’re also small enough to be able to provide individually managed portfolios with a very high level of service,” says Clive W. Robinson, Senior Vice-President and Head of Private Wealth Management. “I think it’s that mid-point that is a sweet spot for our clients.”
Morgan Meighen & Associates provides superior risk adjusted return with good income over the long term that people can invest in for years. “Performance is key and our investment management style is conservative because we aim for absolute returns and we combine that with a very high level of personal service which our clients deserve,” says Robinson. “We continue to add clients at a good pace with individually managed portfolios and we have also introduced some pooled funds a few years ago that have proved to be very attractive.”
Entry level investors who are looking to benefit from Morgan Meighen & Associates investment management are often are the younger generation of existing clients. The Group provides high net worth private client business as well as portfolio management for their funds, which is where most of the growth occurs. They also work with a select few institutions where they offer bespoke investment management for their clients.
“The biggest trend we see both here in Canada and internationally is the emphasis on much greater transparency towards fees and lower fees for investors,” says Morgan. “That happened already a few years ago in the U.K. and that’s coming into effect in Canada and similarly in the U.S.; it’s probably a benefit for Canadian and international investors.”
Because they’re singularly focussed on their clients’ best interests, when Morgan Meighen & Associates invest on their behalf, it’s because they are confident it’s an appropriate opportunity for their portfolio. “We come out looking quite good because we offer reasonable fees,” says Morgan. “We are also seeing a greater move towards passive investing as increasingly the large national houses don’t focus anymore on portfolio management but more so on asset location and putting it into a passive vehicle. In some ways however, it’s gone too far, we’re seeing people creating ETF (exchange traded fund) like structures for illiquid assets. In the post Brexit aftermath a number of these had to refuse redemptions because the underlying asset was far too illiquid and couldn’t properly be priced.” A closed end structure like Canadian General really offers some advantages. As more people in the market move to passive investments that actually opens up opportunities for an active management like Canadian General provides their investors with enhanced returns. These large passive vehicles simply can’t invest in some of the wonderful leading companies that Morgan Meighen & Associates is able to invest in.
Morgan Meighen & Associates singular aim is to grow and preserve their clients’ capital. “In the marketplace, the larger investment institutions are continuing to commoditize their product base and not all clients want that,” says Robinson. “Therefore, that is a benefit to us as separately managed portfolios are attractive. The trend of the banks to scale their businesses and commoditize helps firms like us.”
Whether it’s an individual, corporation, trust, estate or foundation, each of their clients benefits from a one-on-one relationship with a dedicated portfolio manager; the individual in whom they confide is the same person who manages their money. “We acquire clients generally through networking and referrals,” says Robinson. “Our marketing is tightly focused since we’re a boutique firm, so we’re looking selectively to add clients throughout the year.”
“Given the demographics we’re seeing with the aging population and the record low interest rates, what had been a strong interest in income has become insatiable. There is a big worry about that because people just can’t get the income they’re after,” says Morgan. “With Canadian General, it’s nice that we’ve got a fairly attractive yield that’s about 4-4.5 % market yield right now and we’re able to pay that out of two different streams: the income within the portfolio and also out of net realized capital gains. That means we can provide an attractive yield without having to reach into riskier areas to get high yielding products. I think overall, across the demographics it is a worry. The only thing we’ve seen similar to this macroeconomic situation is what happened in Japan in the 1980s to early 2000s. What they refer to as a lost decade and that actually had a major change on consumers behaviour and how they spent their money. It will be interesting to see if that happens in Canada.
“We actually have come through this situation really better than almost anywhere else but it is a worry. Having rates this low for this long is strange and it looks like they’re going to stay this way for a long time,” says Morgan. “That means that Canadians are going to have to reassess their retirement plans, how much they’ve saved, when they’re going to start saving and how long they’re going to work. It’s going to cause some severe social disruptions in the not distant future.”
Morgan Meighen & Associates spend a lot of time looking at companies, meeting management and internally discussing asset classes and allocation in order to deliver performance that is in alignment with the client’s individual risk parameters. “We provide clients with a dedicated portfolio manager and a dedicated administrator,” says Robinson. “The client experience I think, is a good one and that’s reflected in a low turnover of our clients.”
“It’s the collection of communication and always looking to bringing more information,” says Morgan. “We have eight portfolio managers who are all attending any sort of industry conference we can get. We travel abroad to do company visits and we communicate with each other daily and have both informal and formal discussions where we try to gain as much possible industry insight as we can.”
“Structurally, with Canadian General, we’ve made a small change to the nature of leverage that we use in the portfolio, we’ve gained access to bank financing at favourable rates which is an unusual deal for a fund,’ says Morgan. “We’re looking to continue on with organic growth and taking advantage of any opportunities that present themselves to us.”
“We’ve got CRM II coming in which is an important development as it’s a new reporting requirement,” says Robinson. “We will continue to add clients into 2017 and beyond with our existing suite of services and we’re not looking to bring any new product in but add to the existing structure.”
Morgan Meighen & Associates is seeing quite a lot of liquidity among business people who either retire or exit but have been very successful in their own businesses and are looking to assign a portfolio manager that can manage their funds. “Our corner of the marketplace is fairly quiet, we have to find the investment manager as opposed to hearing about them,” says Robinson. “We’re a good solution for the business person looking for this option.”
Canadian General shareholders have enjoyed returns greater than the market. “It’s a track record we’re very proud of and work very hard to try to maintain,” says Morgan. “The fact that they’ve been doing this for a very long time, adds to a collective amount of experience on the team. There is a lot of institutional knowledge in our company. The fact that we are investing our own money alongside our shareholders and investors, I think that makes a big difference.” As financial empires fluctuate, Morgan Meighen & Associates maintain their timeless and traditionally steadfast approach that continues to benefit their clients. “Our long history and tradition help support our success going back to our inception ,” says Morgan. “My family has majority share holding in the company so anyone who is investing with us, is investing alongside us and we aim to keep on going into the future for generations to come.”