CC&L Fundamental Equity Team Update
Plan sponsors may wish to consider whether this investment news has any implications for the investment options available within their plans. Sun Life Assurance Company of Canada purchases units of the funds listed below, which are established as segregated funds in accordance with the Insurance Companies Act (Canada).
In August 2024, Connor Clark & Lunn (“CC&L”), announced planned changes to the Fundamental Equity team (“the team”) as well as some team departures. The team manages half of the CC&L Group Canadian Equity fund and all of the CC&L Group Canadian Small Cap fund on our core platform. The team also manages the Canadian Equity portion of CC&L Group Balanced Plus.
Succession Planning for Gary Baker
CC&L announced succession planning measures in advance of Chief Investment Officer (CIO) Gary Baker's eventual retirement. Baker has led the team for 21 years. He has not yet announced his retirement date and it is not anticipated to be within the next two years.
CC&L announced that Michael McPhillips, Head of Research and Portfolio Manager (PM), would assume the role of CIO for the team when Gary Baker retires. McPhillips will work closely with Baker and Andrew Zimcik, Co-Head of Fundamental Equity, as he transitions into the new CIO role over the coming years. CC&L communicated that Baker would remain the team’s CIO until 2027 or until such time as McPhillips is ready to fully take on the CIO role.
McPhillips started with CC&L in 2013 as an analyst and subsequently advanced to senior analyst in 2016, and PM in 2019. He recently took on the role of Head of Research on the team following Mark Bridges’ retirement at the end of 2023. He has research coverage for the Consumer Discretionary and Real Estate (since 2019) sectors. McPhillips will maintain the Research Director role, but his research duties will eventually be reallocated as he transitions into the CIO role. Kathryn Alexander, PM, will take over Real Estate. Alexander previously worked as a Research Associate for CC&L from 2017 to 2020; she rejoined CC&L in 2023. Consumer Discretionary will be covered by Chang Ding, Senior Research Associate. Ding joined CC&L in 2022.
Team Departures
In Q3 2024, Samba Chunduri, Associate PM covering Materials, left the firm. Chunduri had been with the firm for 19 years. CC&L will not directly replace Chunduri’s PM role but has chosen Jack Ferris, Senior Research Associate, to cover Consumer Staples and Materials.
Ryan Elliott, PM covering Technology and Health Care, will also be leaving the firm at the end of 2024. Elliott has been with the firm for 12 years. Elliott’s research coverage will reside with Baker.
Other changes within the team include Don Towers’, Head Trader, intention to retire at the end of 2024. Towers will be replaced by Joe Tibble, Senior Trader. In September 2024, CC&L hired a technology sector analyst, James Burns. The firm is planning on adding more research analysts in the future.
GRS Investment Solutions team view:
We appreciate CC&L’s succession planning. CC&L’s communication of their succession plans well in advance, suggests confidence in their choice of McPhillips. McPhillips has spent his entire 11-year career with CC&L. However, he has more limited leadership and portfolio management experience. The long lead time provided to Gary Baker’s retirement will allow him to transition responsibilities, learn from working along side Baker, and further develop the skills needed to be CIO.
The departures of Chunduri and Elliott are concerning considering that they were both long-tenured and experienced PMs. Their resignation announcement came eight months after the retirement of Mark Bridges, another long-tenured, senior PM. CC&L has taken some steps to address these and other departures over the last several years. They’ve broadened the team by hiring four research analysts, created a co-leadership team structure with Andrew Zimcik working along side Baker as Co-Head of Equities, promoted internal talent, and expanded ownership. Now, CC&L has formalized a long-term leadership succession under Michael McPhillips. Hopefully, these changes will lead to more team stability.
The Sun Life GRS Investment Solutions team has placed the CC&L Group Canadian Equity fund and the CC&L Group Canadian Small Cap fund on our Watch List under Additional Monitoring (least severe category). The CC&L Group Balanced Plus fund has been on our Watch List under Additional Monitoring since Q1 2024 due to changes within the fixed income team. Our full communication on the changes within the fixed income team can be found here. We will continue monitoring the Fundamental Equity team and provide updates as needed.
Questions?
Please contact your Sun Life Group Retirement Services representative*
*In Quebec, registered as a Group annuity plans advisor.