Annual Business Update – March 2024

At the heart of our organization is the commitment and desire to provide superior performance and service to our clients. Our primary objective is to meet our clients’ expectations while ensuring our people are highly motivated and enthusiastic. This requires that we keep the business narrowly defined on what we do best, and endeavour to remain at the cutting edge of research and development initiatives within financial markets.

Investing in our Future Leaders

Once a year, we take the opportunity to share an annual update with our clients on our business, outlining how we are directing our efforts within CC&L to ensure we are prepared to fulfill our commitment to meeting investment performance and service objectives for our clients.

The past few years have been a period of transformation and growth at CC&L. Our teams have expanded as we are building the next generation of leaders. We have met our investment objectives across most of our strategies, which is contributing to asset growth. Most notably, the expansion in our quantitative equity capabilities and the broadening of our equity offerings and client base have meaningfully transformed our business. This growth is making us consider how to position our business for the next decade.

Our people are the foundation of our company and intellectual capital is our most precious resource. We remain dedicated to investing in our people through career development planning and leadership programs, we strive to enhance skill sets, the depth of our teams, investment processes, and plan for succession.

In support of talent development, CC&L’s Women in Leadership (WiL) initiative began in 2021, led by a committee comprising most of the women in the organization, to identify and address issues contributing to gender imbalance in the leadership within our organization, our industry, and our society.

This imbalance, we believe (supported by academic studies, industry research and personal experience) results from societal influences, complacency and unconscious bias. Although the statistics on gender imbalance in senior positions are disheartening, we are optimistic about driving change through thoughtful and coordinated action. If we successfully tackle the key issues contributing to the leadership gender imbalance, we will substantially broaden the talent pool from which great leaders emerge, creating better business outcomes.

An important – and unexpected – outcome of our efforts is that the solutions identified for leadership gender imbalance are also solutions that apply to broader issues, that can benefit everyone. In 2023, we began implementing the WiL committee’s recommended solutions. For more details, please read our Women in Leadership whitepaper.

Another major initiative over the past year was a project to foster a culture of continuous, real-time feedback, driving innovation, professional growth and motivation. We see feedback as essential for both individual and collective success. Challenging the status quo, innovating and taking risks are crucial in our competitive industry. Reaching our full potential depends on receiving constructive feedback for improvement. This belief led us to invest in a firm-wide development program, facilitated by a third-party consultant, to cultivate and strengthen a culture of feedback and innovation. This process started with an offsite meeting to arrive at a shared vision for our feedback culture and continued with six workshops to build foundational knowledge and skills and integrate feedback practices. This 10-month project was a significant step in our continuous efforts to improve our culture, leadership skills and processes.

In 2024, we will look at enhancing practices for managing parental leaves and career coaching.

In closing, I want to express gratitude to our clients for your trust, confidence and continued partnership.

Sincerely,

Martin Gerber
President & Chief Investment Officer

Our People

Our teams continued to grow in 2023. CC&L welcomed 25 new hires, resulting in a net increase of 18 employees for the year, bringing CC&L’s personnel count to 135. Our business also benefits from the 410 people employed by CC&L Financial Group, supporting business management, operations, marketing and distribution.

Our firm’s stability and specializations remain primary drivers of our business. Key to our success is thorough succession planning and a disciplined approach to career development. Our disciplined annual review process allows us to identify achievements, trends and areas for improvement.

We are pleased to share that several employees were promoted to Principal effective January 1, 2024 in recognition of their important and growing contributions to our firm.

CC&L’s Board of Directors is pleased to announce that, effective January 1, 2024, the following individuals were promoted to business owners of the firm, in recognition of their leadership and impact in their roles.

Fixed Income

Over the past two years, Brian Eby, Portfolio Manager-Macro Strategy, has been executing the final step of his succession plan, working closely with TJ Sutter in a mentorship role, transitioning macro analysis, forecasting and portfolio decisions. After 25 years at CC&L, Brian will be retiring effective June 30, 2024.

CC&L is pleased to announce that TJ Sutter has been promoted to Co-Head of the fixed income team. TJ joined CC&L in February 2021, after 10 years with RBC Capital Markets where he was a Director and Regional Head of the Fixed Income, Currencies and Commodities Group. Previously at RBC, TJ had significant responsibility for implementing investment risk strategies as well as leading a team of nine traders and salespeople with oversight of relationships with some of the bank’s largest clients. In his time here at CC&L, TJ has developed a strong track record as macro strategist for the fixed income team. TJ will partner with David George in the Co-Head role for the next two years as David transitions towards his retirement.

The investment record of the fixed income team is a testament to the excellent work that David has done in shaping the team and building out the fixed income team resources during his tenure. He along with the other partners have developed a talented group that will continue to develop and see opportunities to expand their roles over the next two years. David’s support over this period will allow for a seamless transition of roles and responsibilities ensuring that we are able to continue to successfully meet client investment objectives.

Ted Huang, a quantitative analyst who joined the fixed-income team in 2018 and became a Principal in 2021, was appointed business owner this year. Ted’s combination of strong quantitative skills and practical fixed-income experience has been invaluable in finding unique sources of added value in the bond market.

Fundamental Equity

Brian Milne moved into a role covering the energy sector, replacing Mark Bridges who retired from CC&L effective December 31, 2023. Brian has covered the energy sector for equities and credit for 13 years. He is a business owner and former Senior Credit Analyst covering energy credit for the Fixed Income team, where he collaborated with Mark on the energy sector.

Michael McPhillips was appointed Fundamental Equity Research Director effective December 31, 2023, following Mark Bridges’ retirement. Michael is a business owner with more than 10 years of experience and has been a Fundamental Equity team member since 2013.

The team is focused on developing the next generation of investment leaders and is pleased to announce the appointment of three individuals to business owner:

Lisa Conroy joined the Fundamental Equity Team in 2013 as an analyst covering a number of sectors in the Canadian equity market. Over time, her responsibilities have increasingly focused on supporting CC&L’s clients with insights on portfolio strategy and positioning. In recognition of her impact on the firm as a Product Specialist, Lisa became a Principal in 2022 and a business owner in 2024.

Kathryn Alexander joined the firm in 2017 as a Research Associate focusing on companies in the industrials and diversified financial sectors. She assumed increased responsibilities over time and was promoted to Principal in 2019, before deciding to take a break to start a family. We were excited to welcome her back in 2023 and she has quickly adapted. Her coverage now includes companies in the energy infrastructure, telecommunications and forest products sectors, and she’s also learning the skills to be a lead portfolio manager.

Jack Ferris joined the firm in 2022 as a Research Associate focusing on companies in the materials sector. He became a Principal in 2023. After quickly mastering that sector, his focus expanded to include companies in the consumer staples sector. In addition to researching companies, Jack is learning the skills to be a lead portfolio manager.

Quantitative Equity

Jennifer Drake completed her transition to Co-Head of the Quantitative Equity team effective January 1, 2024. Jenny has assumed primary responsibility for business and team strategy, working alongside Steven Huang, who continues to lead investment strategy.

The team continues to grow, adding people to all sub-teams in 2023, with approximately 10 new staff, bringing the team to 72 members. The plan is to continue investing in leadership resources across sub-teams at a similar pace this year.

Kyle Ingham, lead of the Q Investment Process Management sub-team, transitioned to a strategic role, Head of Investment Management Operations (IMO), effective January 1, 2024. The Q Investment Process Management sub-team is transitioning to a co-leadership model led by Cam MacDonald and Chris Holley.

Client Solutions

The team is adding to its leadership with an eye towards succession for Phillip Cotterill over the next couple of years. Calum Mackenzie joined the firm in July 2023, bringing significant experience from prior leadership roles and is increasingly contributing to the team’s strategic discussions. He became a Principal in 2023 and a business owner this year.

Diana Prenovost joined us in January 2023, working alongside Johanne Bouchard, a Senior Client Relationship Manager, who will be retiring on December 31, 2024, after 18 years at the firm. Diana was promoted to Principal this year and is CC&LIM’s first permanent employee located in our Montreal office.

Investment Management Operations

As Head of Investment Management Operations, Kyle Ingham is responsible for strategic leadership of investment management operations, reporting directly to the President and CIO. Kyle is a business owner who is providing succession for Lee Damji, and he also manages the Quantitative Equity Investment Process Management sub-team. Lee has been at CCL for 26 years, as Head of CC&LFG’s Information Systems team for 20 years and Managing Director, Operations for 2 years until 2019 when he transferred to CC&LIM to take on this new role. He continues to play an advisory role and provides mentoring for leadership development. His planned retirement date is December 31, 2024.

Responsible Investing

CC&L’s 2023 PRI evaluation scorecard reflects several improvements in our ESG activities. We are now ranked at or above median in all measurement categories.

The ESG Committee completed a review of our ESG practices in 2022 and prioritized several improvement areas. A project plan was developed, including enhancements to ESG training, reporting and engagement capabilities outside of Canada. Work in all of these areas began in 2023 and continues in 2024.

Business Update

Assets Under Management

CC&L’s assets under management (AUM) increased by CAD$10 billion in 2023 to CAD$64 billion as at December 31, 2023. We are pleased to report that our business continued to grow through new client mandates across all investment teams. In 2023, CC&L gained 21 new clients and five additional mandates from existing clients totalling CAD$2.6 billion. The majority of new mandates were for quantitative foreign equity from institutional investors outside of Canada.

Product Updates

We are launching a new Fixed Income Core Plus strategy in 2024 that will include CC&L’s core fixed-income strategy along with allocations to mortgages and emerging market debt managed by affiliated teams within CC&L Financial Group.

The distribution of CC&L’s Quantitative Equity strategies has been augmented with a Collective Investment Trust (CIT) platform in the US for ERISA-regulated pension plans. The Q Emerging Markets Equity CIT launched in January and the Q Global and Q International Equity CIT vehicles are also launching this year.

CC&L’s Ireland-based UCITS Fund platform is also expanding this year with the addition of Q Global Equity and Q Global Equity Small Cap funds.

Final Thoughts

We would like to thank our clients and business partners for their support and look forward to continuing to help you achieve your investment objectives.