The happenings on Bay Street -- Canada's version of Wall Street -- are not something the typical U.S.-based mutual fund executive would have his or her eye on. But the latest buzz coming from north of the border should make U.S. fundsters, especially those competing head-on with John Hancock Funds
, sit up and pay attention.
Toronto's Globe and Mail reports
that seven years after Toronto-headquartered Manulife
acquired Hancock Funds' parent, John Hancock Financial Services Inc.
, "there are calls from Bay Street to do what was once unthinkable: Sell the U.S. business."
The paper writes that Manulife's U.S. operations "are sucking up a large proportion of its resources for little return," and notes they are "expected to be a drag on
its earnings for years to come." Also, Standard & Poor's yesterday sliced its credit rating on Manulife's key operating subsidiary and in doing so, pointed to the U.S. unit as a key factor behind the cut.
But the pub also calls the prospect of Manulife spinning off or selling its John Hancock life insurance business "unlikely" at the moment. And it's important to note that there are some U.S. businesses that are darlings in the eyes of Manulife honchos, namely Hancock's mutual fund and 401(k) businesses.
The top brass at Manulife, according to the paper, have drawn up a strategy that they believe would revive growth in their U.S. operations. The plan calls for reducing portions of the life insurance business, including no-lapse guarantee universal life policies, and at the same time increasing emphasis on the U.S. wealth management unit, the divison that houses the mutual fund and 401(k) units.
"We're very excited about the growth of our U.S. business, particularly in the mutual fund and 401(k) area," Manulife CEO Don Guloien
told the Globe and Mail. "And we will always act in the best interests of our shareholders, so no thoughtful idea will not be considered."
This means that Keith Hartstein
, CEO of Boston-based John Hancock Funds, and his counterpart on the 401(k) side, Katherine MacMillan
, will have Guloien's ear now more than ever, and they will have more resources at their fingertips.
Armie Margaret Lee
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