Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IGM Financial Inc (IGIFF, Financial) reported a 4.5% year-over-year increase in adjusted EPS, reaching $0.93 for the quarter.
- Assets under management and advisement (AUM&A) grew by nearly 15% year-over-year, marking a record high for the company.
- IG Wealth Management achieved its best second quarter on record for gross inflows, with $3.6 billion.
- Mackenzie Investments saw a 38% increase in gross sales, indicating a rebound in asset management performance.
- Wealthsimple's assets under administration grew by 87% year-over-year, reaching over $43 billion, highlighting strong client acquisition and retention.
Negative Points
- The Canadian mutual fund industry remained in net redemptions during Q2, affecting overall market conditions.
- IG Wealth Management experienced net outflows of $173 million during the quarter despite strong gross inflows.
- Mackenzie Investments faced net redemptions of $745 million, reflecting ongoing challenges in the asset management sector.
- Advisory fee rates at IG Wealth Management are expected to decrease by approximately 0.5 basis points per quarter due to shifts in client wealth bands.
- The company anticipates continued industry net redemptions into the second half of the year, with gradual improvement expected by 2025.
Q & A Highlights
Q: How is IGM Financial approaching capital allocation given the pause on M&A and the focus on organic growth initiatives?
A: James O'Sullivan, President and CEO, stated that IGM Financial is currently focused on strengthening its core businesses rather than pursuing large M&A activities. The company is prioritizing dividend payments, share buybacks, and investments in projects across IGM, IG, and Mackenzie. The current strategy is to focus internally for a period of two to three years, with no immediate plans for significant M&A, although small opportunities may still be considered.
Q: What are the expectations for industry net redemptions and gross sales trends as we exit 2024?
A: Damon Murchison, President and CEO of IG Wealth Management, noted that while industry net redemptions are expected to gradually improve, sentiment is slowly changing with more investments being made. The firm has seen strong new client acquisition and expects this trend to continue. There hasn't been much change in the types of funds clients are investing in, with managed solutions remaining popular.
Q: What are the drivers behind Mackenzie's net flows and fund performance?
A: Luke Gould, President and CEO of Mackenzie Investments, explained that while some flagship funds have experienced weaker short-term performance, other areas like global quant equity and global equity and income boutiques are seeing strong sales momentum. The firm is focusing on leading in categories where it has compelling performance and expects continued improvement in net flows.
Q: Can you provide more details on the decline in adviser fee rates at IG Wealth Management?
A: Keith Potter, CFO, stated that the decline in adviser fee rates is primarily due to a shift towards mass affluent and high-net-worth clients, which typically have lower fee rates. The expected decline is about 0.5 basis points per quarter, subject to product mix and market conditions. This trend is expected to continue over the next few quarters.
Q: Are there any changes in the types of funds clients are investing in at Mackenzie Investments?
A: Luke Gould mentioned that there has been an improvement in flows into global and US equities, as well as income funds. The firm is seeing positive year-over-year improvements in these categories, which is encouraging given the broader industry trends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
