AGF Management Limited

Welcome to the Q2 2022 AGF Management Limited Earnings Conference Call. My name is Vanessa, and I will 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. To queue up with your question, you can press 0, then 1 on your touchtone phone. I will now turn the call over to Adrian Basaraba. You may begin.

Thank you, Operator. Good morning, everyone. I'm Adrian Basaraba, Senior Vice President and Chief Financial Officer of AGF Management Limited. Today, we will be discussing the financial results for the second quarter of fiscal 2022. 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. For the question and answer period with investment analysts following the presentation, Judy Goldring. president and head of global distribution, will also be available to answer your questions. Turning to slide four, I'll provide an agenda for today's call. We'll discuss the highlights of Q2 2022, 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 the remainder of 2022. After the prepared remarks, we'll be happy to take questions. And with that, I'll turn the call over to Kevin.

Thank you, Adrian, and thank you everyone for joining us today. Second quarter of 2022 saw continued market volatility and weakened investor sentiment. Despite the challenging backdrop, we had another solid quarter. I'll begin with some highlights. We reported AUM and fee earning assets of 40.3 billion at the end of Q2. Our mutual fund business reported net sales of 132 million, marking the seventh consecutive quarter of positive mutual fund net sales. We reported diluted EPS of $0.14, up $0.07 from a year ago. Investment performance in the quarter outperformed target. AJF measures mutual fund performance by comparing gross returns before fees relative to peers within the same category, with the first percentile being the best possible performance. We targeted an average percentile ranking versus peers of 50% over any one year and 40% over three years. At the end of Q2, the average percentile ranking was 41% over the past one year and 39% over the past three years. AJF's fund performance improved relative to peers across a broad range of categories and styles through our disciplined investment process that includes an embedded focus on risk. We ended the quarter with $36 million in cash, $189 million in short and long-term investments, and no debt. We remain well-positioned to weather the current market volatility and have capital available to strategically invest to generate recurring earnings and return capital to our shareholders. This quarter marked AGF's 65th anniversary. In honor of this milestone and to mark Earth Week, AGF announced a partnership with Trees for Life to plant trees for each employee at the Clairville Conservation Area in Brampton. Finally, the Board declared $0.10 per share dividend for Q2 2022. Starting on slide six, we'll 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 3%. I'll provide more color on our mutual fund business in a moment. Institutional, sub-advisory, and ETF AUM decreased compared to prior year, mainly due to one large client redemption that we disclosed in the previous year. During the quarter, we continue to expand our US SMA business and onboard several of our strategies on SmartX Advisory Solutions SMA platform. Our US SMA relationships continue to generate positive flows and AOM is expected to grow gradually over time. We continue to see interest from institutional investors in a number of our strategies, including our global and sustainable offerings, which bodes well for future sales. Our private client businesses continue to demonstrate consistent, steady growth, with AUM increasing 4% year-over-year. Our private alternatives AUM and fee-earning assets were $2.1 billion. It is our goal to reach $5 billion in AUM and fee-earning assets by the end of this year. However, our timing of this target could slip into 2023 as we take a measured approach when evaluating our pipeline of opportunities given market realities. Achievement of the target will also depend on timing of fund closes. Turning to slide 7, I'll provide some detail on the mutual fund business. Mutual fund industry, which after a slow start at the beginning of the year, turned into net redemptions of approximately $11 billion for the three months ended May of 2022, whereas our mutual fund business remained positive, reporting net sales of $132 million for the quarter. AGF outperforming the industry is attributable to our fund's performance and the diversity of our distribution strategy to meet the unique needs of our clients in different markets. Effective June 1st, sales intermutual funds on a deferred sales commission basis are no longer available. As I have mentioned in the past, our business is positioned for industry changes with a lineup of products that can accommodate a variety of fee arrangements and purchase options, such as ETFs, SMAs, and F-Series for fee-based accounts. We continue to work with our partners to support them through the transition as well as review our products to ensure they remain competitively positioned. With that, I'll turn the call back over to Adrian.