Alan Radlo, the former Fidelity Investments manager who started at CI Financial Income Fund recently, put two-thirds of a new global fund...
Alan Radlo, the former Fidelity Investments manager who started at CI Financial Income Fund recently, put two-thirds of a new global fund in Canadian stocks because he expects energy companies to prop up the economy.
Radlo is running a group of three mutual funds for Toronto-based CI Financial, the manager of $63.5 billion (in U.S. dollars) in assets. The global fund, which may invest anywhere in the world, will keep about half of its holdings in Canada in the longer term, spokesman Murray Oxby said.
High oil prices are fueling growth in Alberta, whose tar sands house the world’s largest pool of oil reserves outside the Middle East.
Radlo has bought shares of Calgary-based AltaGas Income Trust, Inter Pipeline Fund and Keyera Facilities Income Fund. He also has purchased Canadian financial firms Manulife Financial and Toronto-Dominion Bank.
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“Canada’s economy is much better positioned than the U.S., and it doesn’t have nearly as many problems as the U.S.,” Radlo, who’s based in Boston, said in an interview. CI Financial is Radlo’s first employer since he left Boston-based Fidelity, the world’s biggest fund company, in December 2006.
Radlo acquired undisclosed stakes in companies such as Altagas and Keyera because of their potential for increasing earnings and dividends. Altagas has a dividend yield of 8.1 percent and Keyera’s is 8 percent, compared with 2.5 percent for Canada’s benchmark Standard & Poor’s/TSX Composite Index.
Alberta, whose economy grew 7 percent in 2006, produces about 68 percent of Canada’s daily oil output and 77 percent of gas production, according to the Canadian Association of Petroleum Producers.
“In the oil-sands basin, a lot of the companies that are going to have organic growth are some of the pipeline companies that feed in there,” Radlo said.
“These companies will continue to pay a nice dividend and be good, safe stocks regardless of whether the economy is good or bad.”
Radlo “is a talented stock picker, he has a strong track record and a loyal following, so his hiring is very significant for CI,” Dan Hallett, an independent mutual-fund analyst in Windsor, Ontario, said in an interview. Radlo said he’s wary of U.S. banks because of concern over write-downs linked to subprime loans. Companies such as New York-based GFI Group, which accounts for about 30 percent of trading in coal derivatives, and commodity risk-management services provider FCStone Group are attractive because they’re “on the periphery” of the financial-services industry, he said.
Neither company is involved in lending and instead provides services to banks and brokerages, making them less risky, Radlo said.
In Canada, Radlo said he’s not planning to buy shares in all of the country’s five biggest banks and will initially focus on Toronto-Dominion.
He said he will aim to diversify by adding stocks such as real-estate and power-plant owner Brookfield Asset Management Inc., Toronto investment bank GMP Capital Trust and asset manager Gluskin Sheff + Associates Inc.