AGF Management Limited (AGF.B)

Q1 2011 Earnings Call

March 30, 2011 11:00 am ET

Executives

Blake Goldring - Chairman of the Board and Chief Executive Officer

Robert Bogart - Chief Financial Officer, Executive Vice President and Member of Executive Committee

Mario Causarano - President of AGF Trust Company and Chief Operating Officer of AGF Trust Company

Analysts

John Reucassel - BMO Capital Markets Canada

Jeff Fenwick - Cormark Securities Inc.

Paul Holden - CIBC World Markets Inc.

Geoffrey Kwan - RBC Capital Markets, LLC

Scott Chan - Canaccord Genuity

Stephen Boland - GMP Securities L.P.

John Aiken - Barclays Capital

Presentation

Operator

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Ladies and gentlemen, thank you for standing by. Welcome to the AGF First Quarter 2011 Financial Earnings Conference Call. [Operator Instructions] Your speakers for today are Mr. Blake C. Goldring, Chairman and Chief Executive Officer of AGF Management Limited; and Mr. Robert J. Bogart, Executive Vice President and Chief Financial Officer of AGF Management Limited.

Today's call and accompanying presentation may include forward-looking statements. Such forward-looking statements are given as of the date of this call and involve risks and uncertainties. A number of factors and assumptions were applied in the formulation of such statements, and actual results could differ materially. For additional information regarding such forward-looking statements, factors and assumptions, AGF directs you to the caution regarding forward-looking statements, which is contained at Page 2 of the presentation, AGF's MD&A for the three months ended February 20, 2011, and AGF's most recent annual information form.

I will now turn the call over to Mr. Bogart. Please go ahead, Mr. Bogart.

Robert Bogart

Thank you, operator. Good morning, everyone. I'm Bob Bogart, CFO of AGF Management Limited. It's a pleasure to have you join us today for our first quarter results for fiscal year '11. Please note that the slide supporting today's call and webcast can be found in the Investor Relations section of agf.com. Today, Blake Goldring, Chairman and CEO, and I will discuss AGF's first quarter results. Also joining us on the call and available to answer questions is Mario Causarano, President and COO of AGF Trust.

I'll now turn the call over to Blake.

Blake Goldring

Thank you, Bob, and welcome to everyone listening to today's call. Since our last update in late January, AGF completed the acquisition of Acuity on February 1, 2011. The Acuity integration is well on track, and we're confident the acquisition will produce long-term synergies with our existing strong business. The acquisition exemplifies AGF's commitment to diversification while effectively leveraging our core focus as an investment management firm. For example, we've established ourselves as both a retail and institutional firm, and this acquisition reinforces that strategy. We have good sales momentum, which I'll speak to you in detail in just a moment.

Our strategy is well on track, and sales are improving despite ongoing challenges in the broader marketplace. In fact, our gross retail sales in the past quarter grew 26.5% compared to the same period last year. We're really optimistic about this trend. There continues to be solid interest in the marketplace for AGF and Acuity products. While net redemptions remain an issue, they're concentrated in a few mandates that we continue to manage closely. At AGF Trust, while assets are down, we continue to build our strategy programs -- our mortgage programs in both the broker and advisor channel. And in doing so, the credit quality of our loan book has improved considerably. AGF Trust views the mortgage broker market as an attractive source of high-quality loan originations. We don't expect significant growth overnight, but we will take a strategic and long-term approach to growing our loan assets in a profitable manner.

Slide 5. Let me turn to assets under management. We are one of the largest independent investment management firms in Canada. Our assets under management have increased 19.7% to $52.5 billion year-over-year. While the Acuity acquisition helped boost our assets under management, we're confident that we can continue to grow our assets organically across-the-board. You will notice from this slide that we've had growth across all three client lines: Retail, institutional and high net worth. Speaking of which, let's turn to institutional sales. I'll begin with the quarter which shows that we are continuing to achieve good momentum in the institutional space. For example, while total institutional net flows were at negative in Q1, we have another $750 million of mandates committed in the pipeline. We continue to be encouraged by the strength and opportunities in the institutional space.

Let's turn our attention to the trend over the last five years. You'll recall that we spent considerable time building the institutional foundation back in 2006 with the acquisition of Highstreet, which really cemented our foothold in this space. Our acquisition of Acuity continues to reinforce this strength. 2008 was a difficult year for all markets, as we can all remember too well, and we've now seen a rebound over the past three years. We're now at a historical high in institutional assets under management and have surpassed our previous high in 2007. We've almost doubled our institutional assets under management since the crash of 2008. We're confident we can continue to grow and make inroads in this very important space, both domestically and globally.

Now let's turn our attention to retail. In terms of retail sales, we saw positive trends in gross sales grow over the year period. Our gross sales growth is actually 26.5% higher in Q1 2011 versus the same period in 2010. Our retail gross sales growth is outpacing the overall market, and we’ve gained gross sales market share based on [indiscernible] (12:46) data. Again, we're confident that we are on track and our strategy is working. Our comprehensive product shelf, our strong relationships and our Focus Funds approach will all contribute to future growth.

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