AGF Management Limited

Thank you for standing by, and welcome to the Q1 2024 AGF Management Limited Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. As a reminder, this call is being recorded. I would now like to introduce your host for this conference call. Mr. Tseng, you may begin.

Thank you, Operator, and good morning, everyone. I'm Ken Tseng, Chief Financial Officer of AGF Management Limited. Today, we will be discussing the financial results for the first quarter of fiscal 2024. Slides supporting today's call and webcast can be found in the investor relations section of AJF.com. Also, speaking on the call today will be Kevin McCready, Chief Executive Officer and Chief Investment Officer. For the Q&A period following the presentation, Judy Goldring, President and Head of Global Distribution, and Ash Lawrence, Head of AGF Capital Partners, will also be available to address questions. Turning to slide four, I'll provide the agenda for today's call. We will discuss highlights of the first quarter results for 2024, provide an update on our business, review our financial results, discuss our capital and liquidity position, and finally, close by summarizing the key investment highlights for AGF. After the prepared remarks, we would be happy to have questions taken. With that, I will now turn the call over to Kevin.

Thank you, Ken, and thank you, everyone, for joining us today. At the end of the first quarter, our AUM and fee-earning assets reached $45 billion, up 7% from a year ago. Adjusted diluted EPS was 51 cents in the quarter, up 89% year over year. In addition, we have $320 million in short and long-term investments on our balance sheet, net debt of $17 million, with $110 million available on our credit facility. We have capital available and flexibility in our capital allocation strategy. In February, we announced a strategic investment in New Holland Capital, a New York-based multi-strategy investment manager with over US $5 billion in AUM or $7.4 billion in Canadian dollars. Subsequent to the quarter on March 8th, we also announced the closing of our previously announced transaction to acquire 51% of Kensington Capital Partners. I'll speak more to this later on, and Ash will be available for questions. Finally, the board declared an 11.5 cent per share dividend for Q1 2024, representing a 5% dividend increase. This is the fourth consecutive year where we have increased our dividend. 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 9% year over year, outpacing the industry, which increased by 7%. Our ETF and SMA AUM increased 20% year over year. I'll provide more color on our mutual fund businesses and ETF and SMA AUM in a moment. Segregated accounts and sub-advisory AUM increased by 2% compared to the prior year. During the quarter, we received a redemption notice from one of our institutional clients for $800 million. The redemption was driven by the client's shift towards passive management. Last quarter, we onboarded two of our global equity strategies onto an institutional platform in Asia. Getting onto this platform expands our distribution reach for the strategy. Since this relationship started in late 2004, we've had cumulative net flows of close to $72 million. Our private wealth AUM increased by 7% compared to the prior year to $7.8 billion. and our capital partners AUM and fee-earning assets were $2.2 billion at the end of the quarter. Closing the Kensington transaction will increase the assets to $4.8 billion. Turning to slide 7, I'll provide some details on the mutual fund business. The challenging market environment continued to weigh on industry and AGF flows, but improved from Q4 to Q1 in part due to the RRSP season. The Canadian mutual fund industry experienced net redemptions of approximately $4 billion in a quarter, which is the industry's eighth consecutive quarter of net outflows. AGF reported mutual fund net redemptions of $125 million in a quarter. Since Q2 of 2022, when interest rates started increasing, the industry has had over $140 billion of net redemptions in long-term funds. while AGF achieved positive retail mutual fund net sales of approximately $100 million over that same period, allowing us to grow our overall market share. Looking forward, we continue to take a long-term approach to increasing our penetration in high-growth distribution channels by diversifying our capabilities and offerings. I want to now give a quick update on our investment performance. AGF 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. Our long-term fund performance remains solid. At the end of Q1, our three-year performance has been in the 50th percentile, and our five-year performance has been in the 45th percentile. Furthermore, approximately 60% of our strategies are outperforming our peers on a three- and five-year basis. In addition, four of our funds The AGF Global Select, AGF American Growth, the AGF Global Convertible Bond, and AGF Fixed Income Plus earned the fund-grade A-plus awards, which are given annually to investment funds and their managers who have shown consistent, outstanding, risk-adjusted performance throughout the year. Our one-year performance was in the 68th percentile. As discussed in previous quarters, our one-year performance continues to be impacted by extreme market narrows experienced in the spring of 2023. As those months drop off, our one-year performance is expected to improve. Slide 8 shows our ETF and SMA AUM. The AUM in this category has grown 49% on a compounded basis over the last two years. Included in this number are Canadian and U.S. listed ETFs and SMA platforms globally. We have seen consistent growth and momentum in the SMA business, both in the U.S., Canada, as well as Asia. where a number of our strategies are available on leading SMA and wealth management platforms. In February, we broadened our ETF offerings with the launch of ETF series on three of our longstanding funds. These ETF launches further advance our goal to provide investors with options to access our capabilities and their preferred investment vehicle. With that, I will turn the call over to Ken.