Dean Orrico – Wealth Professional Leader Profile

With strategic focus on equity income and collaborative leadership, Middlefield continues to outperform

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  • Dean Orrico – Wealth Professional Leader Profile
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Dean Orrico on fostering connections for a competitive edge

Whether the market goes up or down, Dean Orrico’s funds continue to win medals. Consistently going for gold, Middlefield funds have won awards by sticking to their knitting with a particular focus on maximizing returns while mitigating risk.

Suffice it to say, Orrico’s doing a few things right by successfully avoiding high-risk scenarios that can irreparably impair portfolio performance. The future of the economy, whether it will experience a hard or soft landing, remains uncertain; however, Middlefield’s funds are designed to withstand any economic turbulence.

Reflecting on his three-decade career with Middlefield, initially beginning as an analyst, Orrico witnessed and contributed to the firm’s significant evolution, growing alongside it.

Strategic vision: Equity income at the forefront

In the mid-90s, Middlefield was navigating its path, known primarily for its opportunistic ventures in real estate and resources, leveraging tax-advantaged strategies. Yet, it was during this formative period that the seeds of change were sown, leading Middlefield to asset management with a focus on equity income.

“As we ventured into asset management, particularly equity income, I discovered my passion for the industry. This passion wasn’t just about building portfolios and strategies to benefit individual and institutional investors but also about supporting advisors through regular interactions, conversations, and educational presentations. I found that blending these aspects matched my strengths and interests perfectly,” says Orrico.

“As we ventured into asset management, particularly equity income, I discovered my passion for the industry. This passion wasn’t just about building portfolios and strategies to benefit individual and institutional investors but also about supporting advisors”

Economic resilience

The period from 2010 to 2020 was characterized by exceptionally low interest rates, a scenario that favoured growth stocks, particularly in the technology sector. However, the advent of the pandemic in 2020 introduced volatility and marked the beginning of a new economic era, one that Orrico believes will be defined by persistently higher inflation and interest rates.

The dominance of the “magnificent seven” stocks in driving the S&P 500’s performance is well acknowledged. Yet, Orrico posits a shift toward a more diversified investment approach, predicting a rise in the significance of equity income investments. This shift is propelled by the anticipation of increased market dispersion, offering a strategic advantage to investors seeking to fulfill their income and total return needs through equity income.

During the previous decade, the market’s focus on growth presented challenges for equity income strategies. However, Orrico views the current environment as a tailwind, signalling a return to strategies that align with Middlefield’s core competencies.

The firm’s approach is multifaceted, offering a range of products designed to cater to the needs of advisors, individual investors, and institutional clients alike. Middlefield’s offerings span various sectors, including real estate, healthcare, infrastructure, and diversified equity income, all aimed at delivering competitive total returns. Notably, Orrico leads various investment strategies that have been consistently recognized for their excellence, such as its real estate ETF, which achieved a Fundata Fundgrade A+ for real estate equity in 2023, and his real estate mutual fund, which was awarded the Lipper’s Best Fund over 5 years – Real Estate Equity for 2021 & 2022. Orrico also manages the UK’s only listed Canadian equity trust focused on high income (admitted to the FTSE UK All-Share Index in 2011). The fund, Middlefield Canadian Income, recently won Citywire’s prestigious Best North America Equities Trust category at their annual award gala in London.

“What distinguishes Middlefield in the industry is our longstanding relationships with advisors, spanning over decades – more than 25 years for me personally and over 40 years for the firm”

Investment philosophy

No stranger to the line of fire, Orrico says, “Over 20+ years in the industry, I’ve learned that the market can surprise you with sudden shifts, emphasizing the importance of diversification. Holding onto a company, provided you maintain your conviction in its potential, is often more prudent than frequently trading its stock. Essentially, it’s more about spending time in the market rather than trying to time the market – a lesson learned the hard way.”

In 2023, with rising interest rates, many investors opted for cash alternatives, attracted by returns of 5 to 6 per cent with minimal risk. “As wealth managers, our goal is to reintegrate these clients into the equity market, believing in the strength of our product offerings to meet this demand. Yet, the challenge lies in reallocating funds back into the market to work for our clients, emphasizing the importance of a long-term investment perspective. We view the GIC rates of 5 to 6 per cent last year as temporary and fading, predicting a decrease in rates later this year. It suggests a strategic shift toward diversifying into equity income, offering the potential for competitive total returns over the long term,” says Orrico.

From a macroeconomic viewpoint, despite the potential for a slowing economy or severe recession, Middlefield’s stance is that the economy is merely slowing, not heading into a severe downturn soon. Orrico anticipates interest rates will stay higher than in the past. However, should inflation return and interest rates climb further, it could pose challenges for the asset and wealth management industries.

Inclusive leadership

Acknowledging the potential economic challenges identified by Middlefield, Orrico’s approach to leadership within this context becomes even more critical, as it emphasizes the importance of an inclusive and communicative environment.

Orrico fosters an environment where every team member feels empowered to contribute. “We try to have a very flat structure, so lines of communication are open right across the firm,” Orrico explains, emphasizing the importance of a culture that encourages open dialogue, defying the status quo, and thinking outside the box. This approach has been pivotal in maximizing resources and nurturing a collaborative atmosphere.

“What distinguishes Middlefield in the industry is our longstanding relationships with advisors, spanning over decades – more than 25 years for me personally and over 40 years for the firm. These enduring connections are invaluable and represent a significant barrier for new entrants, particularly within North America and Canada,” says Orrico.

The fund manager believes the field is ripe with opportunities and can be highly rewarding. Since most entrants have similar academic backgrounds, success largely depends on one’s ability to integrate within an organization. Supporting colleagues, regardless of their position – be it juniors, peers, or seniors – can significantly impact your career trajectory and ultimate success.

“I’ve observed that fostering a collaborative and collegial environment, rather than insisting on singular perspectives, often leads to the most effective solutions for both clients and the firm. Success in this industry is not just about having the right answers but about working together to find the best ones,” says Orrico.

 

 

 

 

Disclaimer

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. You will usually pay brokerage fees to your dealer if you purchase or sell units/shares of investment funds on the Toronto Stock Exchange or other alternative Canadian trading system (an “Exchange”). If the units/shares are purchased or sold on an Exchange, investors may pay more than the current net asset value when buying and may receive less than the current net asset value when selling them. There are ongoing fees and expenses associated with owning units or shares of an investment fund. An investment fund must prepare disclosure documents that contain key information about the fund. You can find more detailed information about the fund in these documents. Mutual funds and investment funds are not guaranteed, their values change frequently and past performance may not be repeated. Certain statements in this disclosure are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may”, “will”, “should”, “could”, “expect”, “anticipate”, “intend”, “plan”, “believe”, or “estimate”, or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what Middlefield Funds and the portfolio manager believe to be reasonable assumptions, neither Middlefield Funds nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.

This material has been prepared for informational purposes only without regard to any particular user’s investment objectives or financial situation. This communication constitutes neither a recommendation to enter into a particular transaction nor a representation that any product described herein is suitable or appropriate for you. Investment decisions should be made with guidance from a qualified professional. The opinions contained in this report are solely those of Middlefield Limited (“ML”) and are subject to change without notice. ML makes every effort to ensure that the information has been derived from sources believed to reliable, but we cannot represent that they are complete or accurate. However, ML assumes no responsibility for any losses or damages, whether direct or indirect which arise from the use of this information. ML is under no obligation to update the information contained herein. This document is not to be construed as a solicitation, recommendation or offer to buy or sell any security, financial product or instrument.

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