CI Financial continues U.S. wealth expansion with acquisition of a strategic interest in The Cabana Group
Transaction supports accelerated distribution of innovative risk-managed investment strategies
TORONTO (April 21, 2020) – CI Financial Corp. (“CI”) (TSX: CIX) and The Cabana Group, LLC, the parent company of Cabana Asset Management (together “Cabana”) of Fayetteville, Arkansas, today announced an agreement under which CI will acquire a strategic interest in Cabana, becoming the largest shareholder in the registered investment advisor firm with US$1.1 billion in assets under management (as of April 17, 2020).
Cabana has an exceptional track record of growth, being ranked by Financial Advisor magazine as the fastest-growing registered investment advisor (“RIA”) in the U.S. in 2018 and the second fastest-growing RIA in 2019. In addition to providing a comprehensive suite of investment management and wealth planning services, Cabana offers a highly successful lineup of risk-managed portfolios to its retail clients and on a sub-advisory basis to RIAs and advisors across the U.S.
Cabana’s Target Drawdown Portfolios, which are only offered in the U.S., have achieved strong results, with all four portfolios eligible for a rating from Morningstar Inc. receiving the top five-star overall rating (as of December 31, 2019). The portfolios are designed with the goal of minimizing losses within a predetermined drawdown parameter, while actively participating in favorable market conditions.
“The Target Drawdown Series – both recently and over the longer term – has generated strong demand and helped to fuel Cabana’s rapid growth,” said Kurt MacAlpine, CI Chief Executive Officer. “Given current market conditions and the ongoing need for effective retirement solutions, there is a tremendous and timely opportunity to offer the Target Drawdown Series to a wider audience in both the U.S. and Canada.”
“Identifying a strategic partner to more widely distribute our products and services in the U.S. has always been our goal,” said Chadd Mason, Cabana’s Chief Executive Officer and co-founder. “CI’s financial strength, vision, expertise in asset and wealth management, and commitment to building a client-focused RIA business provide excellent support for Cabana’s next wave of growth.”
Mr. Mason noted that the Target Drawdown strategies have posted positive net flows every month this year, including every week since the start of the recent downturn. In addition to the firm’s signature Target Drawdown Separately Managed Account (SMA) Portfolios, Cabana offers its unique investment strategy in the form of Collective Investment Trusts (CITs) for use within 401k plans, as well as a hedge fund.
All Target Drawdown products numerically quantify acceptable levels of risk at the onset of the investment process and are actively managed using Cabana’s proprietary Cyclical Asset Reallocation Algorithm (“CARA”). Cabana Asset Management claims compliance with the Global Investment Performance Standards (“GIPS”) and all of its portfolio composites are third-party examined consistent with GIPS.
The Cabana transaction is part of CI’s initiative to build a U.S. wealth management business within the RIA sector, the fastest-growing segment in North American wealth management. The initiative supports CI’s three strategic priorities of modernizing its asset management business, expanding wealth management and globalizing the company. CI has also acquired a majority interest in Surevest Wealth Management of Phoenix, reached an agreement to purchase a majority stake in One Capital Management, LLC of Westlake Village, California, and signed a letter of intent to purchase another RIA.
“This initiative is based on our belief that the role of the financial advisor is more important than ever, and unprecedented recent events bear that out,” Mr. MacAlpine said. “This presents opportunities for firms like CI that can meet investors’ increasingly complex needs with a holistic approach to investing and wealth planning.
“With a leading wealth management business in Canada, we are well placed to attract new clients and new advisors,” he said. “We continue to execute our U.S. strategy and with our investment in Cabana we will have over US$3.4 billion in total assets in our U.S. RIA business.”
CI’s Canadian wealth management businesses are Assante Wealth Management (Canada) Limited and CI Private Counsel LP, which together accounted for approximately C$43.7 billion in assets under advisement as of March 31, 2020.
CI previously disclosed on February 14, 2020 that it had signed letters of intent to acquire two additional RIA firms, of which Cabana is one. The Cabana transaction is currently expected to close later this quarter. Terms were not disclosed.
About The Cabana Group
The Cabana Group, LLC provides a comprehensive suite of services to clients and advisor partners from offices in Arkansas, Texas and Colorado. Its services include wealth management, portfolio construction, retirement plan solutions, tax and estate planning, business development, insurance, annuities and sub-advisory money management. The company was ranked the No. 1 fastest-growing company in Arkansas by Inc. Magazine in 2019, while Financial Advisor magazine ranked subsidiary Cabana Asset Management in the top two fastest-growing registered investment advisers in 2018 and 2019. The Target Drawdown Series is available in the United States to individual investors and advisors through the industry’s leading custodians. For more information, visit www.thecabanagroup.com.
About CI Financial
CI Financial Corp. (TSX: CIX) is an independent Canadian company offering global asset management and wealth management advisory services. CI held approximately C$156 billion in fee-earning assets as of March 31, 2020. Its primary operating businesses are CI Investments Inc., Assante Wealth Management (Canada) Ltd., CI Private Counsel LP, GSFM Pty Ltd., WealthBar Financial Services Inc., and BBS Securities Inc. Further information is available at www.cifinancial.com.
This material is for informational purposes only. It is not a recommendation, offer or solicitation to buy or sell any securities. Past performance is no guarantee of future results. All investment strategies have different degrees of risk and the corresponding potential for profit or loss. Asset allocation and diversification will not necessarily improve returns and cannot eliminate the risk of investment losses. “Target Drawdown” is merely a descriptive term used to describe the general strategy and objective of the portfolio, it is not a guarantee, nor should it be construed to suggest safety or protection from loss. There is no guarantee that portfolio performance will remain consistent with the targeted drawdown parameter. While risk tolerance and targeted “drawdown” are identified on the front end for each portfolio, Cabana’s algorithm does not take any one client’s situation into account and there is no guarantee that Cabana’s strategies will be suitable for any investor. Investors and advisors should not simply rely on the name of any portfolio to determine what is suitable.
Investment advisory services provided by Cabana LLC, an SEC registered investment adviser. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Cabana claims compliance with the Global Investment Performance Standards (GIPS®). To receive a GIPS Report and/or a list of composite descriptions please email your request to email@example.com. GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. For additional disclaimers about Cabana, including awards and rankings, please visit https://thecabanagroup.com/disclaimers/.
© 2020 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Target Drawdown Portfolios are part of Morningstar’s Tactical Allocation category, which is made up of 326 total funds.
This press release contains forward-looking statements concerning anticipated future events, results, circumstances, performance or expectations with respect to CI Financial Corp. (“CI”) and its products and services, including its business operations, strategy and financial performance and condition. Forward-looking statements are typically identified by words such as “believe”, “expect”, “foresee”, “forecast”, “anticipate”, “intend”, “estimate”, “goal”, “plan” and “project” and similar references to future periods, or conditional verbs such as “will”, “may”, “should”, “could” or “would”. These statements are not historical facts but instead represent management beliefs regarding future events, many of which by their nature are inherently uncertain and beyond management’s control. Although management believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements involve risks and uncertainties. The material factors and assumptions applied in reaching the conclusions contained in these forward-looking statements include that the investment fund industry will remain stable and that interest rates will remain relatively stable. Factors that could cause actual results to differ materially from expectations include, among other things, general economic and market conditions, including interest and foreign exchange rates, global financial markets, changes in government regulations or in tax laws, industry competition, technological developments and other factors described or discussed in CI’s disclosure materials filed with applicable securities regulatory authorities from time to time. The foregoing list is not exhaustive and the reader is cautioned to consider these and other factors carefully and not to place undue reliance on forward-looking statements. Other than as specifically required by applicable law, CI undertakes no obligation to update or alter any forward-looking statement after the date on which it is made, whether to reflect new information, future events or otherwise.
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