Tonus Capital, Québec Expert in U.S. Equities

When we met with Tonus Capital (Tonus) for this interview, the firm had recently entered the QEMP program and had just received an initial investment allocation to support the launch of its institutional product, the U.S. Small Cap Equities Fund. With the program committee’s approval, Tonus is now poised for growth within its team of analysts as well as across the key institutional investor niche.

Philippe Hynes, CFA – President

Expanding its hiring is one of the tangible reasons why the firm joined the QEMP initiative. “As a result of this support, we are contributing to Quebec’s business ecosystem, and I think our fund will get assets from the rest of Canada and the United States for our portfolio,” says Philippe Hynes, Tonus Capital President and CEO.

“Large institutions like the idea of investing with smaller managers, like us, who have greater flexibility than larger firms. However, the consultants and selection committees’ high operational requirements are often an impediment (to smaller managers being chosen),” Philippe notes. The QEMP program has actually been an excellent tool for helping Tonus reach this next level of service.

The Tonus Advantage

Tonus’ CEO started monitoring the stock market at a very young age. “My father bought me 100 Bell Canada shares when I was eight years old, and I still have the sheets where I would draw graphs every day after checking the share price in the newspaper. I have always been a stock market enthusiast,” he recounts.

Since its launch in 2007, Tonus has generated strong performances with its North American investment strategy, which appeals to private wealth clientèle from Québec and Ontario. In 2019, the firm introduced a complement to this approach, its U.S. Small Cap Equities Fund. Highly skilled at security selection and in-depth fundamental research, Tonus designs its own financial models; regularly meets with the management teams of the companies wherein it invests; and develops its own investment theories. The firm also stands out because of its customized, analytical work and value-oriented strategy. “We try to find relatively unknown, misunderstood securities, or those that are temporarily unpopular for various reasons, something which greatly differentiates our portfolio from securities in the benchmark index,” Philippe remarks.

According to Tonus’ CEO, emerging portfolio managers are especially driven to get the best results while thoroughly respecting their clients’ investment policies and risk management demands. Indeed, sustaining growth for their portfolios by providing superior performances is what helps them move forward. “We can’t deviate from our investment philosophy if we want to hold on to our mandates, so it’s beneficial for clients to work with small firms such as ours, which will do all in their power to exceed expectations,” Philippe explains. He also believes geographical proximity is an asset for Québec’s asset managers, since they are generally more available to local investors who are, of course, likely to be essential to their success. “The quality of service and of the contact with the investor, and the transparency shown, these things are all the more valuable in this context,” he says.

In addition to contributing to the local financial sector’s health through their own success, Tonus is committed to getting involved in the firm’s community. For 12 years now, Philippe has been teaching an equity investment course at Concordia University. “That’s how I give back to the university and the next generation, by showing them what we do as part of a syllabus I developed,” he points out. As well, Tonus employees are members of various Boards of Directors for several Montreal foundations.

What Is Keeping Tonus Capital Busy Now

While continuously focusing on risk management and the quality of its analyses, Tonus continues to deliver excellent performance, and to provide its clients with exceptional transparency. “We are very open to dialogue when it comes to our clients, we want them to feel included and have a good understanding of our decisions and methods,” Philippe explains.

Having spent more than a decade perfecting its first investment product, Tonus is now working to promote the institutional element of the firm’s service offerings, as it maintains the great flexibility made possible by its North American strategy.

To know more about the firm.

Tonus Capital member’s file.

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