2020

May 25, 2020

Hexavest Investment Team Changes

On April 16, 2020, Hexavest announced they are reorganizing their investment team.

Vital Proulx, co-founder and Chairman of the Board, once again becomes the sole Chief Investment Officer. The investment management team will also move from a four-team regional focus to a single team. The team members work in Developed Markets, led by Christian Crete, or Emerging Markets, led by Jean-Christophe Lermusiaux.

This streamlines the firm’s investment leadership and decision-making. It also restores the conditions that helped deliver good investment results in the past. Hexavest believes that the model that served them best so far has been a smaller, more agile team.

Hexavest has decided to remove the role of co-chief investment officer, held by Vincent Delisle. The investment team is also eliminating the following positions:

  • Portfolio Manager, Asian Markets (Etienne Durocher-Dumais)
  • Portfolio Managers, North American Markets (Kevin LeBlanc and Mathieu Roy)
  • Analyst, European Markets (Catherine Bilodeau)

Assets under management declined from $20.5 billion (end of 2017) to $13.3 billion as of March 31, 2020. Hexavest states that the restructuring of the team was not for cost cutting reasons. There were four employee terminations to the investment team, noted above, but no cuts to operations and support staff. Hexavest also stated that they have no debt and significant cash reserves.

Our View
The significant underperformance of the Hexavest funds during the COVID-19 market decline led to the restructuring. Since 1998, Hexavest has outperformed during each major market downturn. Capital preservation is a core tenet of their investment philosophy. Therefore, performance in 2020 was troubling to Mr. Proulx and the other Hexavest veterans.

In 2018, co-CIO, Vincent Delisle, joined Hexavest. This was partly because the firm believed they needed a senior team member to challenge its defensive mindset. The co-CIO role and the decision to grow the team on a regional basis over time, has proven unsuccessful. There is a loss of investment talent and bench strength as result of the changes. Key person risk also increases, as strategies will become more reliant on Mr. Proulx’s judgement and leadership.

We have placed the Hexavest World and Hexavest Europac funds On Watch. This is due to the investment team restructuring and the significant decline in assets under management over time. We will monitor the firm and strategies closely in coming quarters and give updates as needed. 

Questions?
Please contact your Sun Life Group Retirement Services representative.