AS IF THUMBING his nose at fate, French Canadian Jean-Guy Desjardins picked April Fool's Day in 1972 to go it alone and start up a fund management firm. 'I had to be a fool to do that,' he joked. He started out with just himself, a secretary and C$30 million (about HK$151 million) to manage in a small office in Montreal. But he has since shown himself to be nobody's fool by building his company, TAL Global Asset Management, into Canada's biggest private-sector money manager. He now has 700 staff taking care of C$58 billion and a heavyweight partner in Canadian Imperial Bank of Commerce (CIBC). Mr Desjardins is still the second-largest shareholder in TAL, a private company, behind CIBC. In Hong Kong, TAL has a joint venture with CIBC and Cheung Kong (Holdings) - TAL CEF Global Asset Management, which oversees US$1 billion. Another office in Geneva takes care of European investing. 'If I tried to summarise how we did that it was because we had an investment philosophy that was very structured and disciplined,' said Mr Desjardins. 'We had the ability to attract high-quality people and we retained our professional people more by providing them with an environment of success . . . than by paying them tonnes of money. 'We managed to put together that virtuous circle. Good people generates good performance, good performance generates good business and that keeps us going.' Mr Desjardins does not believe in resting on his laurels. 'We have had a dream all along about what TAL will be in 10 years. You have to have a dream in life and in business.' He is a fund manager who got into business rather than a businessman who got into fund management and he still likes to play an active role in the investment decisions of his company. As well as being chief executive and president of TAL, he also heads the firm's seven-member global asset allocation committee. The panel sets an overall tone for TAL's 65 investment professionals, telling them how the company's portfolios should be split geographically and between cash, stocks and bonds. 'I'm a macro-manager. I don't get involved in micro-stuff,' he said. 'TAL has developed a very unique reputation as an asset allocation organisation.' While many fund managers have been throwing in the towel on hopes for an early recovery in the US economy, Mr Desjardins is staying upbeat, pointing out that investors have to forget the here-and-now and think at least six months ahead. For now he has been timing the market and claims to have made a good fist of it. He sold equities globally at the end of last year, taking his cash up to 20 per cent and went underweight on equities by 20 per cent. '[We knew that] when the reality of the [economic] weakness in the fourth quarter caught up to market psychology then earnings estimates would start to come down and set the market back. That's exactly what happened,' Mr Desjardins said. He ordered his fund managers to buy equities again after global markets underwent a punishing first four months of the year. The sell-off at that point was over-done because 'the slowdown in the US economy was controlled'. 'The central bank had already begun lowering interest rates in a very aggressive fashion in that three-month period,' he said. Then cash was raised back to 12 per cent in June, after markets enjoyed a spring bounce and went way past where Mr Desjardins believed they should be at that stage in the cycle. With markets heading south once more through the summer on a swag of disappointing first-half results, Mr Desjardins has his finger back near the buying trigger. 'We think that for a little while we should be going sideways. But the next step will be for a very strong market rally,' he said. 'We are very close to investing all our cash into the equity market.' Underpinning Mr Desjardins' optimism is his belief that the double action of cutting interest rates and taxes in the US will be enough to put the economy back on to a robust growth path in the first quarter of next year. The risk of a global economic recession by the middle of next year is 'non-existent now because they have dealt with the imbalances'. TAL's economists give a 50 per cent chance to the US staging a steady economic recovery and only put a 20 per cent likelihood on it staying near a recession in the year to next June. Rapid or inflationary growth is given a 30 per cent chance. Under TAL's steady economic recovery scenario, the US will grow 2.5 per cent next year, Europe will achieve growth of 2 per cent and the Fed funds rate will bottom at its present rate of 3.5 per cent. Ten-year US treasuries are seen yielding 5 per cent. Given that backdrop, TAL forecasts a 9.3 per cent return from US equities and a 7.3 per cent return from Hong Kong's stocks. Leading a recovery will be the familiar big names in technology such as Dell Computer, IBM and Cisco Systems, said Mr Desjardins. Many of these counters are now 'incredibly cheap', he said. While Mr Desjardins is optimistic on the US, he actually prefers Europe from an asset allocation point of view. He is slightly overweight in Europe at the expense of the US. 'We think that Europe is the healthiest economy of all the major economies in the world,' he said. 'It is not suffering from any imbalances and it is still operating 2-3 per cent below potential GDP.' TAL forecasts that European equities will return 18.5 per cent in the year to June 30. Japan, dogged by a 10-year period of economic stagnation after a stock and real-estate bubble burst, is ever the wild card. 'It is a very good risk reward proposition,' said Mr Desjardins. The move by the Bank of Japan to further loosen its super easy monetary policy was a strong indication it believed reformist prime minister Junichiro Koizumi would deliver on his promises. If the stock market perceived real action to deal with Japan's crippled financial sector it might run up sharply enough, though the reforms might hurt the economy in the short term, said Mr Desjardins. 'You could have the Japanese stock market going up by 20 or 30 per cent and the Japanese economy contracting by 2 per cent,' he said. Rather than seeing a bleak future for the world, Mr Desjardins believes the worst may be behind us and finally Japan and Europe can join the US for a co-ordinated global upswing. 'We are completing a transition period that will set the foundation of a period of global economic prosperity for the next two to five years which we haven't seen for the last 20 years.' Jean-Guy Desjardins 1967: Graduated with a degree in economics from Mont St Louis College in Montreal. 1969: Graduated with an MBA in finance from Montreal University. 1969: Started work as a technology analyst and fund manager with Sun Life. 1972: Founded TAL Global Asset Management. 1991: Passed third stage of Chartered Financial Analyst exams.