AGF Management Limited

Welcome to the Q4 2021 ATF Management Limited Earnings Conference Call. My name is Richard, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press star, then 1 on your touch-tone phone. Please note that this conference is being recorded. I now turn the call over to Adrian Basaraba. Mr. Basaraba, you may begin.

Thank you, operator, and good morning, everyone. I'm Adrian Bassarab, Senior Vice President and Chief Financial Officer of AGF Management Limited. Today we'll be discussing the financial results for the fourth quarter and fiscal 2021. Slides supporting today's call and webcast can be found in the investor relations section of AGF.com. Also speaking on the call today will be Kevin McCready, Chief Executive Officer and Chief Investment Officer. And for the question and answer period with investment analysts following the presentation, Judy Goldring, President and Head of Global Distributions. We'll also be available to address questions. Turning to slide four, I'll provide an agenda for today's call. We will discuss highlights of the fourth quarter and fiscal 2021, provide an update on the key segments of our business, review our financial results, discuss our capital and liquidity position, and finally close by outlining our focus for 2022. After the prepared remarks, we will be happy to take questions. And with that, I'll turn it over to Kevin.

Thank you, Adrian, and thank you everyone for joining us today. Over the past year, we have made significant progress against our strategy and stated goals. I'll begin with some highlights. Our business momentum was strong in 2021. AUM and fee earning assets reached 42.6 billion at the end of Q4, an increase of 4.4 billion compared to 2020. Our mutual fund business reported net sales of 352 million in a quarter, marking the fifth consecutive quarter of mutual fund net sales. We achieved mutual fund net sales over $1.4 billion for the year, that being the best year since 2007. In November, we evolved our longstanding relationship with Primerica, one of the fastest growing distributors in Canada, with the establishment of a new multi-year product and services distribution management agreement. AGF was named as one of only two managers to launch on their platform. This showcases AGF's success in strengthening this relationship dating back to 1996 and our commitment to supporting the evolution of our strategic partners as they adapt to changes in the market. In 2022, we will launch a new lineup of funds that will be offered exclusively to Primerica clients. The new funds are subject to regulatory approval. Over the past year, we have made significant progress in diversifying and expanding our private alternatives business. In early July, we deepened the alternatives business with the launch of two private credit products with the SAF Group. Subsequent to the launch, we refined our long-term partnership with SAF as their exclusive provider of SAF's private credit product in the Canadian retail marketplace. We also strategically expanded our private alternatives business into the private equity and venture capital space by partnering with First Ascent Ventures, a firm that focuses on investing in emerging technology companies. Most recently, we announced Ash Lawrence will be joining AGF as the head of alternatives. Ash brings over 20 years of private alternatives experience in global markets, including 16 years most recently with Brookfield Asset Management, where he led real estate investing for Canada. He will be leading the continued growth of our diversified private alternatives business. Private alternatives are an integral part of our growth strategy, and with the progress we made in 2021, we are well positioned to accelerate its growth. Strong business momentum has translated into strong financial results for the quarter. We reported an adjusted diluted EPS of 19 cents, and on a full year basis, we reported an adjusted diluted EPS of 55 cents, up 31% from the 42 cents reported in 2020, excluding one-time items in S&W. In addition, AGF and our funds received various recognitions during the year. AGF was named Importer of Choice and Digital Innovator of the Year in the 2021 Wealth Professional Awards. And our global convertible bond fund received the Lipper Fund Award. Finally, we paid a quarterly dividend of $0.09 per share for the fourth quarter. Starting on slide six, we will provide updates on our business performance. On this slide, we break down our total AUM and fee earning assets in the categories disclosed in our MD&A and show comparisons to the prior year. Mutual fund AUM increased by 18%. I'll provide more color on our mutual fund business in a moment. Institutional sub-advisory and ETF AUM decreased compared to prior years, mainly due to the redemptions that we disclosed in the previous quarters. During the year, we onboarded two large U.S. institutions who selected a number of our strategies for inclusion on their SMA platforms. While AUM growth on these SMA platforms will occur gradually over time, we are optimistic based on flows for the initial months. Leveraging the success of these wins, we are onboarding our strategies onto more platforms. Looking ahead, RFP and RFI activities have remained strong. We continue to see interest from institutional investors in a number of our strategies, including our global, sustainable, and multi-asset offerings, which bodes well for future sales. Our private client business continues to demonstrate consistent, steady growth, with AUM increasing 17% year over year. Our private alternatives AUM and fee-earning assets were $2.2 billion. With Ash Lawrence joining us next month, Along with our robust pipeline of opportunities in the alternative space, we maintain our goal of reaching $5 billion in AUM and fee-earning assets by the end of this year. Turning to slide 7, I'll provide some detail on the mutual fund business. The Canadian mutual fund industry continued its strong pace towards the end of 2021, reporting net sales of $22 billion for the three months ending November 30, 2021. Excluding net flows from institutional clients invested in funds, net sales were $355 million compared to $66 million in Q4 of last year. AGF sales improvement outpaced that of the industry. When comparing Q4 to prior year, gross sales for our long-term funds improved by 39% compared to 18% in long-term funds for the industry. We continue to see year-over-year improvements across all channels, IROC, MFDA, and strategic partnerships, with strong flows into multiple categories, including global and U.S. equities, fixed income, and sustainable opportunities. The momentum in our retail mutual fund business has continued into Q1. Excluding net flows from institutional clients, we have net sales of approximately $115 million up to January 21st. Before I return the call back to Adrienne, I want to give a quick update on investment performance. AGF measures mutual fund performance by comparing gross returns before fees relative to peers within the same category, with first percentile being the best possible performance. We target an average percentile ranking versus peers of 50% over one year and 40% over three years. At the end of Q4, average percentile ranking was 53% over the past one year and 51% over the past three years. It's important to note that the one- and three-year performance of our top-selling funds have largely remained in the top quartile. With that, I will turn the call back over to Adrian.