Risen from the ashes

Sentry Investments CEO Sean Driscoll explains how the financial crisis of 2008 helped shaped the asset management firm into what it is today

When Sean Driscoll made his return to the family business, he didn’t get much of a grace period to learn the ropes. The year was 2007, 10 years after Sentry was founded by Sean’s father, John F. Driscoll. The firm was still very much a growing company at that time, but as events played out over the next 12 months, its identity as an independent investment manager was forged.

“It was a baptism by fire, but a very inter­esting time in the business,” Driscoll says. “When I first joined, it was called Sentry Select Capital and was mainly in retail structured products and closed-end funds. After the financial crisis, we looked at the business and decided we would focus more on mutual funds, so we converted many of those closed-end funds into mutual funds.”

Driscoll had previously worked with Sentry Select before getting his MBA from York University’s Schulich School of Business. This led to a position with Canaccord Capital Corporation, where he developed expertise in M&A, equity and debt underwriting, as well as developing valuation models for private and public companies. His time there served him well, and within two years, he had rejoined Sentry.

“I started in investor relations with the firm in 2007 and progressively moved up and took more responsibility,” he says. “I became CEO in 2013, but my role with the company hasn’t changed dramatically, just my title.”

His return to Sentry was a period of great change, both for firm and the industry at large, but looking back, Driscoll real­izes that the events of 2008 are what built Sentry Investments into what it is today – an asset manager with $19.5 billion AUM, representing more than 500,000 Canadian investors. Driscoll has had a front-row seat for the company’s growth – a seat that would eventually occupy centre stage in the boardroom.

House rules
At age 38, Driscoll is certainly one of the younger CEOs on Bay Street, which could be considered a negative or a positive, depending on your perspective. Experience is a highly valuable asset, of course, but it’s also true that most firms have had a lot of trouble reaching younger investors. Sentry primarily targets high-net-worth clients, which today usually means Baby Boomers, but that won’t always be the case. Thus, it’s important to have more people in the industry who are actually from that younger demographic – and to have some of them in top positions.

Sentry clearly thinks so, and its CEO has been central to the direction the firm has taken in what has become a difficult invest­ment environment. For Driscoll, main­taining a “house style” for the firm is crucial to its continued growth. This has meant an approach to investing that clients can associate with Sentry whenever they walk through the door.

“Our style really is balance-sheet and cash-flow focused, so we want to invest in companies that are resilient to various changes and external shocks,” Driscoll says. “Having high free cash flow is important, as is having quality management teams that allocate capital well. Our house style is applied consistently across the product range here. The result of that tends to be strong risk-
adjusted returns and a lower volatility than many of our peers.”

Currently, the firm’s main focus is on the North American market, but Sentry is dipping its toe into international waters, too, looking at developed markets in Asia, Australia and Europe. Canada is its home, however, and will always be a key consider­ation. Most recently, this was evidenced by the launch of the Sentry Private Investment Program for those planning for retirement. It’s a substantial population in this country, and an obvious market for the firm to target.

“The retired market is huge,” Driscoll says. “People are living longer, so longevity risk is becoming a key issue. The Private Investment Program is for high-net-worth investors, so a minimum investment of $100,000. It has lower fees and more cost-traded portfolios.”

Poised for the future
Aiding Sentry as it expands its product range will be Gaelen Morphet, who joined the firm as CIO in April in what was one of the more notable hires seen in investment circles this year. The position had been occupied by Sentry’s vice-chairman and director, Sandy McIntyre, on a temporary basis following Dennis Mitchell’s abrupt departure last year, so the firm was keen to install a long-term replacement. Adding the highly experienced Morphet to the team was considered a real coup for Sentry.

“What we wanted to do was find a long-term solution for the next decade,” Driscoll says. “So after an exhaustive search, we approached Gaelen. When she agreed to join, we were absolutely ecstatic. Her repu­tation is stellar, and she will allow for a lot of consistency in what Sentry is trying to deliver in the marketplace. Stylistically, she is very much aligned with Sentry, so she’s a great fit in a number of ways.”

Clearly Sentry is a company not afraid to change direction when warranted. Its name in the industry has been built on mutual funds, but with ETFs really starting to gain a foothold in Canada, will Sentry become the latest provider?

“It’s an area of the market we are monitoring, but we have no plans to launch ETFs,” Driscoll says. “We are firm believers in active management and that it really adds value for investors. So we are focused on generating strong risk-adjusted returns in the mutual fund market.”