AGF Management Limited

Hello, and thank you for standing by. And welcome to the Q2 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 the question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Mr. Ken Tsang. You may begin.

Thank you, operator, and good morning, everyone. I'm Ken Tsang, Chief Financial Officer of AGF Management Limited. Today, we will be discussing the financial results for the second 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 AJF Capital Partners, will also be available to address questions. Slide 4 provides the agenda for today's call. After the prepared remarks, we will be happy to take questions. 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 second quarter, our AUM and fee-earning assets reached $47.8 billion, up 16% from a year ago. Adjusted diluted EPS was $0.35 in the quarter. In addition, we have $329 million in short and long-term investments on our balance sheet, with net debt of $36 million. Our financial position remains strong, which provides us with flexibility in our capital allocation strategy. Our investment performance strengthened in the quarter. One-year performance improved to the 45th percentile in the current quarter, while three-year performance improved to the 44th percentile. On March 8th, we closed our transaction to acquire 51% of Kensington Capital Partners, and we've consolidated their results starting this quarter. Ken will speak more to this later on. Finally, the board declared an 11.5 cents per share dividend for Q2 of 2024. Starting on slide six, we will provide an update 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. Our mutual fund AUM increased 14% year-over-year, outpacing the industry, which increased by 10%. Our ETF and SMA AUM increased 29% year over year. I'll provide more color on our mutual fund business and ETFs and SMA AUM in a moment. Segregated accounts and sub-advisory AUM decreased by 8% compared to the prior year. As we had previously disclosed in the last quarter, we had redemptions of approximately $900 million, mostly coming from one institutional client. The redemption was driven by the client's shift towards passive management. Our private wealth AUM increased by 12% compared to the prior year to $8 billion. And our AGF Capital Partners AUM and fee-earning assets were $4.7 billion at the end of the quarter, up $2.6 billion from the prior year due to the closing of the Kensington transaction. As a reminder, New Holland Capital's AUM of $7.4 billion is not consolidated into AGF's total AUM and fee-earning assets. Turning to slide 7, I'll provide some details on the mutual fund business. Canadian mutual fund industry experienced net redemptions of about approximately 4 billion in the quarter, which is about flat to the prior quarter. This is the industry's ninth consecutive quarter of net outflows since interest rates started increasing in Q2 of 2022, which resulted in net outflows of over 140 billion for the industry. Over the same period, our retail mutual fund net flows have been about flat. AGF mutual fund net redemptions were $112 million in the quarter, which is an improvement of 10% quarter over quarter, mainly driven by an increase in gross sales. Looking forward, we continue to take a long-term approach to increasing our penetration and 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 one-year performance was in the 45th percentile, a market improvement from the 68th percentile in the first quarter. As referenced in prior calls, our one-year performance has been benefited as the weaker performance experienced in the spring of 2023, driven by extreme market narrowness, has rolled off. Our long-term performance remains solid and strengthened further in the quarter. At the end of the second quarter, three-year performance is in the 44th percentile, and approximately 60% of our strategies are outperforming our peers on a three- and five-year basis. Now, turning to slide eight, it shows our ETF and SMA AUM. The AUM in this category has grown 49% on a compound 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 US, Canada, and in Asia, where a number of our strategies are available on a leading SMA and wealth management platforms. Notably, the AGF Global Select ADR Constrain strategy was recently named the winner in the global category at the SmartX 2024x Awards. And the AJF U.S. Large Cap Growth Equity Strategy was named a finalist in the large cap category. With that, I'll turn the call back over to Ken.