IGM Financial Inc. reported its Q1 2025 earnings, revealing an adjusted earnings per share (EPS) of $1.00, falling short of analysts’ forecast of $1.05. The company’s revenue also missed expectations, coming in at $875.8 million compared to the forecasted $893 million. Following the earnings release, IGM Financial’s stock price increased by 1.49% in after-hours trading, closing at $44.97, reflecting a positive market reaction despite the earnings miss. According to InvestingPro data, the company maintains a market capitalization of $5.61 billion and shows strong financial health with a "GOOD" overall rating.
Key Takeaways
- IGM Financial’s Q1 EPS fell short of expectations by $0.05.
- Revenue missed forecasts by $17.2 million.
- Stock price rose 1.49% post-earnings announcement.
- Client assets grew 19% year-over-year, exceeding $500 billion.
- New product innovations included 11 investment funds and expanded quant offerings.
Company Performance
IGM Financial demonstrated robust growth in client assets, which increased by 19% year-over-year, surpassing $500 billion. Despite the earnings miss, the company showcased strong performance in product innovation and strategic investments, which contributed to its competitive positioning in the financial services sector. InvestingPro analysis reveals that IGM’s liquid assets exceed short-term obligations, indicating strong financial stability. The Canadian market’s volatility in Q1 and softened industry-level sales were notable challenges.
Financial Highlights
- Revenue: $875.8 million, below the forecast of $893 million.
- Earnings per share: $1.00, compared to the forecast of $1.05.
- Returned $213 million to shareholders, including $79 million in share repurchases.
- Operations and support expense growth of approximately 6% year-over-year.
Earnings vs. Forecast
IGM Financial’s actual EPS of $1.00 was 4.8% below the forecasted $1.05, marking a miss in expectations. The revenue shortfall was $17.2 million, reflecting a variance of approximately 1.9% from projections. This performance contrasts with previous quarters where the company often met or exceeded expectations, indicating a potential shift in market conditions or internal challenges.
Market Reaction
Despite missing earnings expectations, IGM Financial’s stock saw a 1.49% increase in after-hours trading, closing at $44.97. This positive movement suggests that investors may have been encouraged by the company’s strong growth in client assets and product innovation. Trading at a P/E ratio of 5.73, according to InvestingPro data, the stock remains within its 52-week range, with the high at $47.96 and the low at $35.33, indicating stable investor confidence.
Executive Commentary
CEO James O’Sullivan expressed confidence in the company’s growth trajectory, stating, "We continue to demonstrate consistent growth during the first quarter." He emphasized the favorable market conditions for financial advice and asset management, reinforcing the company’s strategic focus on these areas. Damon Murchison, CEO of IG Wealth Management, highlighted the importance of mortgages in financial planning, a key area of growth for the company.
Risks and Challenges
- Market volatility in Canada could impact future earnings.
- Softened gross sales at the industry level may affect revenue growth.
- Expense growth of 6% year-over-year could pressure margins.
- Investor confidence was slightly impacted by market uncertainty.
IGM Financial’s Q1 2025 results reflect a mix of challenges and opportunities, with strong asset growth and innovation offset by missed earnings expectations. The company’s strategic focus on expanding its product offerings and maintaining competitive positioning remains central to its outlook.
Full transcript - IGM Financial Inc. (IGM) Q1 2025:
Conference Operator: Thank you for standing by. This is the conference operator. Welcome to the IGM Financial First Quarter twenty twenty five Analyst Call and Webcast. As a reminder, all participants are in a listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.
I would now like to turn the conference over to Kyle Martin, Head of Investor Relations. Please go ahead.
Kyle Martin, Head of Investor Relations, IGM Financial: Thank you, Betsy. Good morning, everyone, and welcome to today’s call. Joining me here, we have James O’Sullivan, President and CEO of IGM Financial Damon Murchison, President and CEO of IG Wealth Management Luke Gould, President and CEO of Mackenzie Investments and Keith Flodder, Executive Vice President and CFO, IGM Financial. Before we get started, I would like to draw your attention to our caution concerning forward looking statements on Slide three of the presentation. Slides four and five summarize non IFRS financial measures and other financial measures used in the material.
And on Slide six, we provide a list of documents available on our website related to IGM’s Q1 results. That will take us to Slide nine, and I’ll turn it over to James. All right. Thank you, Kyle, and good morning, everyone. I think we continue to demonstrate consistent growth during the first quarter, delivering adjusted earnings per share of $1 a first quarter record.
Our core businesses, IG Wealth and Mackenzie, also ended the quarter with record high client assets, while each of our strategic investments delivered double digit year over year growth. Including strategic investments, our client assets grew by 19% year over year, surpassing for the first time $500,000,000,000 at the end of the quarter. As our Wealth and Asset Management businesses continue to execute on their plans, IGM Financial benefits from their diversified sources of growth across multiple geographies. We also benefit from their differentiated go to market strategies that are further elevated through real interconnectivity among businesses. This combination of
U. Another dimension is our balance sheet strength and financial flexibility, which is underscored by IGM’s strong credit profile, modest leverage and a significant unallocated capital balance, which exceeded $600,000,000 at the March. Turning to Slide 10 and the current operating environment for our businesses, starting with recent financial market conditions. While much of the first quarter was characterized by considerable uncertainty, the financial markets, for the most part, proved resilient until early April when we saw a spike in volatility. Despite the volatility, our businesses remain well positioned.
This is a very good market for financial advice, a very good market for asset management, and this is a very good time to have diversification in our businesses and in our clients’ assets. And importantly, the driver of recent market volatility is at its core solvable uncertainty. To the extent the underlying issues are solved, the strength of our businesses will be most evident in the near term. If the market chooses not to recognize this, we are in a very strong financial position and have the firepower to purchase more ITM shares and will. As shown on Slide 11, the positive momentum we saw in the Canadian operating environment during 2024 continued into the RRSP season.
By March, the uncertainty has shown signs of weighing on investor confidence. While redemption rates were stable, we saw gross sales soften slightly at the industry level. Damon and Luke will speak to this and each of their businesses during this call. On Slide 12, we present our Wealth and Asset Management earnings results, which Keith will address shortly. And on Slide 13, we see how each of the six wealth and asset management businesses contributed to IGM’s strong asset growth over the course of the last year.
We remain very confident in the business that we have architected over the past several years and its ability to drive strong medium term earnings growth. David, over to you. Thank you, James, and good morning, everyone. Turning to slide 15 and wealth management’s first quarter highlights including IG Wealth, Rockefeller, and Wealthsimple. During the quarter, we saw record growth inflows and sales into IGM products as well as record q one growth inflows from new clients.
IG Wealth ended the quarter with AUA of $141,500,000,000 up a solid 11% year over year and up 1% during the first quarter driven by financial markets and strong net flows. Gross inflows during the April saw record gross sales and continued the first quarter trend with growth in net sales in the IGM products surpassing growth and net flows as clients continue to dollar average cost into these volatile markets. Total growth inflow from newly acquired clients were 1,300,000,000.0 with master fluid and high net worth clients representing 76% of these flows. Our mortgage and insurance businesses continued their momentum as we extended our partnership supporting our key industry wealth drivers in the first quarter while adding a new partner focused on philanthropy and legacy planning. For the second straight year, IG ranked number one in earned earned media share of voice among Canadian banks and independent wealth man wealth brands.
And for 02/2024, we also earned the top position of industry spokesperson. Both Wockefeller and Wealthsimple had strong quarters, which I’ll also speak to in coming slides. Turn to slide 15. You can see IT’s q one, April, and last twelve months net flows. On the left, you can see our first quarter and April net flows.
While April is typically a seasonally slow month as clients focus on prepping and paying taxes, I’d like to highlight two important things. The first is this year’s tax bills were higher than traditionally expected industry wide due to clients triggering capital gains ahead of
James O’Sullivan, President and CEO, IGM Financial: the proposed capital gains inclusion rate increase. And two, growth flows momentum slowed, but still remained at record high levels even with this tough market back backdrop.
Kyle Martin, Head of Investor Relations, IGM Financial: As seen on the right hand portion of the slide, market volatility has not prevented our clients from continuing to dollar cap average into the market as our last twelve months net sales into IGM products continue to move closer to our total net flows. As our clients continue to adjust to this complex economic environment, we are more confident than ever in the value of our financial planning and our advisors’ ability to partner with our clients to build, quantify, and preserve, and distribute their wealth. Turn to slide 17. You can see our operating results, which provide further insight as to the strength of this business. At the top left, you can see the year over year decrease in our growth outflows rate.
You can also see the split of our current client assets with current cash, GIC, and HEISSA balances, which continue to support our client dollar cost averaging back into the markets today and over the coming quarters. Turning to slide 18 and our growth inflows from newly acquired clients. In the first quarter, we continue to show strong growth in new client inflows from mass affluent high net worth clients, which grew year over year by 1080%, respectively. During the quarter, high net worth clients acquired accounted for over 3030% of total new client inflows. This included over a hundred and $60,000,000 from three clients.
And while we do not indicate that this size of client is a core focus, successful closing at this scale provide a further example of how we’ve transitioned this business and how we now have a firm position at the table as we ride for high net worth and even ultra high net worth clients. Turning to slide 19 and our continued momentum in the mortgage and insurance businesses. I’ll make two points here. The first is our mortgage funding was up 58 53% year over year, supported by more advisers who are collectively referring more mortgages and increased penetration across the country. Second point, our new annualized insurance premium increased by 15% year over year, reflecting our focus on investing and in growing this business.
Q1 is traditionally a slower quarter for the insurance business given the investment focus of our RSP season. The fact that this was our best insurance q one in first year commission since 02/2017 speak to our strong momentum we have in this business. Now turning to slide 20. This slide represents another important component of our journey. Having a national voice, sharing our thought leadership across a number of dimensions and being omnipresent.
02/2024 for the second year running, IG Wealth was once again recognized as the number one wealth brand amongst independent and national banks from an earned media perspective. 02/2024 also brought two additional first for IG. We ranked first in the Quebec market in earned media share of voice. And secondly, we took the top position for the most visible industry spokesperson. We continue to lead from the front in this country showcasing our knowledge on financial planning, insurance, tax planning, banking, and investment strategy, while also providing our thought leadership and speaking to our best in class advice experience.
We are communicating our ability to solve complex financial problems, which is increased by in lockstep with the complexity driven by today’s economic backdrop. Now turn to slide 21, and I’ll provide some updates on Rocket Miller’s progress. Client assets were up 16% year over year, driven primarily by inorganic and organic growth. Over the last twelve months, organic growth has driven 5,500,000,000.0 in client assets, primarily through Rockefeller’s core wealth platform. Rockefeller also continues to add to their private adviser network with 24 new advisers being added during the first quarter.
Turn to slide 22 and Wealthsimple. Wealthsimple continues to deliver strong AUA growth driven by their ability to attract new clients and increase their share of wallet. Wealthsimple increased their clients served by 15% year over year, company’s largest customer pleased
James O’Sullivan, President and CEO, IGM Financial: our
Kyle Martin, Head of Investor Relations, IGM Financial: are a few
highlights for Mackenzie and for asset management during the quarter. We ended the quarter with record high AUM of $219,000,000,000 at Mackenzie, up 7% versus last year and 2.5% in the quarter. Net sales of $3,400,000,000 during Q1 included previously announced institutional awards of $3,600,000,000 that funds during the quarter. During Q2, another $1,000,000,000 of these institutional awards will fund and the size was extended around $600,000,000 beyond what was previously announced. Year to date, we’ve launched 11 new investment funds for retail, focused on areas of emerging growth and to complement our existing offering.
I’ll give some color on these in a few slides. And at the bottom, both China and Northeast continued to have good growth during the quarter. China AMC’s investment funds have grown by 27% year over year, while Northleaf delivered another consecutive quarter of $1,000,000,000 in fundraising as they’ve done every quarter since our partnership began with them four years ago. Turning to Page 25, you can see the trend and history of Mackenzie’s Q1 and April net sales. On the top left, our Q1 investment fund net flows were slightly positive and up meaningfully from last year and gross sales were up 12%.
In the bottom left, you can see that in the context of the challenging market environment, our April flows were up from 2024 and our best level since 2021. I’d also note that following the launch of a range of active equity ETFs last year, we’re seeing an increasing proportion of our flows come in ETF forms. On Page 26, at the bottom left, you can see our net sales segmented between retail and institutional and by product type. While retail gross sales were up 11%, net redemptions were in line with last year. Improvements we’re seeing in products with strong momentum have not yet offset the declines in products that had softer performance in the environment that we’ve just exited.
And I’m going to review this trend on the next slide. And in the bottom left, you can see the momentum in institutional investment funds as well as the Q1 institutional funding, which brought net sales there to $3,500,000,000 At the top right, you can see a reduction in our share of assets in four and five star funds. We lost March of twenty twenty, the start of the pandemic from our five year track record in a few of our larger, more durable funds that have generated significant alpha at the start of the pandemic. Importantly, these same funds are now generating meaningful alpha and strong performance within the current of to announce that we have a strong sheet are that and strong As I spoke to on the previous slide, we’ve
moved out of that narrow NVIDIA led environment into this moment of greater volatility and breadth of returns, and we are seeing very strong wealth investment performance being put on across many of our boutiques. At the left, the third column from the left, you can see our IV franchise with its quality focus delivers very well in environments like this, and you can see strong near term performance here. And as you go across to the right, you’ll see that we’ve also seen improvements in near term performance in Bluewater with its durable growth approach as well as GreenShift with its focus on the environment transition. I’d also highlight towards the right the continuing strength in our global quant equity and global equity and income boutiques. You can see we’ve got net sales momentum here, which has been building with retail net sales of $529,000,000 here this quarter and this momentum continued into Q2.
Turning to Page 28. I want to take a moment to focus on one of our key priorities, product innovation and a breadth of relevance offering. We’ve had a very busy retail product launch program in 2024, and this is continuing into 2025 with a focus on areas with emerging growth and ensuring that we have the comprehensive shelf with positioning in all the right places. Twenty twenty four’s product launch is focused on trailblazing quant as well as bringing active equity ETFs to market. Last quarter, we highlighted our global Kuan equity boutique and their strong growth and recent business development wins, and we’ve updated that snapshot on the right.
On the left, you can see the 11 mandates that we brought to market year to date, and we’ve highlighted the theme. Beyond these themes, upcoming 2025 launches will also be focused on better beta and expanding our Northeast private offering. With the four new quant products launched this quarter and the nine launched last year, we now have a very broad quant offering of 15 different mandates, all with very compelling track record delivered by our team’s holistic quant approach. You can see as you go down the schedule on the left, we’ve extended our active fixed income ETF offerings with target date maturity ETFs and the AAA CLO mandate that brings to retail a strong track record improvement capabilities that we’ve developed elsewhere. We’ve also added to our liquid alts offering with two enhanced yield funds that combine our flagship five star global dividend fund with an option strategy to enhance yields.
And we’ve also brought to the Canadian market our U. S. Elfa extension strategy that we’ve been running for FDI in The United States. This is the one twenty twenty long short strategy with a very strong track record that seeks to generate excess returns with the same market closure. I also do want to highlight that we brought our Asian and European equity team, Symkimbi Retail, with an international all cap equity mandate, where we’ve brought a strong track record in a space that we believe is really well positioned for the time period we’re entering.
And lastly, we partnered with Platinum to bring their flagship U. S. Value mandate to the Canadian marketplace, and we are seeing a renewed interest in value investing. The only other comment I have on this slide is to remind on the rate that we do have an additional $1,000,000,000 in previously announced institutional partnership business funding in Q2. Moving on to Page 29, a few comments on the Chinese investment fund industry.
On the left hand side, the industry experienced net redemptions during the first quarter, and we did have some investors redeeming following equity market recoveries during Q4. Chinese Sea’s market share and position remains very strong. They’re the second largest in the market in long term funded overall, and they saw their market share increase from 5.6% to 6.2% in the last year. On Page 30, you can see that while China NC’s long term fund assets declined in light of the industry in the quarter, money market and institutional assets grew very well, driven by net inflows and total assets have now reached a record high level of KRW 2,700,000,000,000.0 or C525 billion dollars And turning to Page 31. As mentioned, you can that significant the quarter.
We in we Adjusted EPS, which excludes Lifeco’s other items, was $1 a record Q1 high. We returned $213,000,000 to shareholders in the quarter, including $79,000,000 in share repurchases. And during q one, we accelerated our repurchase to offset the heightened option exercises from q four, and we expect the repurchases during 2025 will extend beyond the antisemitism of actions as we continue to execute our NCIB program to purchase up to 5,000,000 shares. Our operations and support and business development expense growth was approximately 6% year over year. I’ll speak to the business specific seasonality for IG and Mackenzie on their respective slides, but reaffirm our 4% expense growth target for the full year.
And finally, our unallocated capital increased to $615,000,000 which is a jump from $531,000,000 last quarter, and this increase is primarily driven by retained cash earnings and a $66,000,000 dividend from China AMC. Turning to Slide 34, you can see our AUM and A and flows. As seen on the right side, Q1 asset growth was positive and ended assets up 9.1% year over year and 1.7% in the first quarter. April was defined by significant volatility, which is visible on the chart on the left. And despite this, assets were down only 2% compared to the March.
Turning to slide 35 on point two. Net investment income of 7,800,000.0 was primarily reflects interest on cash balances, and this is down from prior periods due to lower interest on cash, lower seed capital gains, and FX on some US cash balances. Looking forward, market volatility may impact net investment income in the coming quarters and seed capital gains. Point three for operations and support business development expenses to help with seasonality in model, we expect expenses to be slightly higher in Q2 than Q1 and are targeting Q2 expenses to be approximately $290,000,000 plus or minus as there’s always some uncertainty and timing of expenses. On Slide 36, we present the key profitability drivers for IG Wealth Management, and I’ll highlight a few points.
On the left, you can see that average AUM and a was up 2.3 over last quarter, driven by investment returns and net inflows. And on the right, the advisory fee rate and product and program fee rates are both in line with expectations and the asset based compensation rate is down slightly in the quarter. As we move forward through the next couple of quarters, we do expect slight upward movement in this rate. On slide 37, IG’s overall earnings of a hundred and 28,400,000.0 in q one, and I’ll point one other financial planning revenue, which primarily reflects the insurance business as well as mortgage results that were in line with our expectations excluding fair value adjustments. And looking forward, we expect to see similar results in the mortgage business next quarter, again excluding the impact of fair value adjustments.
And on other revenue, which is primarily comprised of insurance, but it also includes the roll off of some of our legacy banking program. We expect to see similar growth on a year over year basis in q two as in q one. Also, as a reminder, insurance volume and revenue tend to be seasonally higher in q four relative to q one as Damon spoke to. A target of approximately a hundred and $70,000,000 for q two. And similar to last year, the second quarter will include higher discretionary spend.
Moving to slide 38. We have Mackenzie’s AUM by client and product type as well as net revenue rates. On the left, you can see average AUM is up 1.7%, which is supported by the onboarding of $3,600,000,000 in previously announced institutional wins. And on the right, you can see our overall third party rate, which dropped due to mix shift driven by both our institutional wins and the ongoing success with our wealth management partnership. And rates were also impacted in the quarter by fewer days during the first quarter, which we commented on our Q4 call.
Looking forward, the onboarding of three point on The is And to be clear, this is a pro form a perspective once the full 4,600,000,000.0 has been on boarded for a full quarter. Turning to Slide 39, you can see Mackenzie’s earnings of 52,600,000.0. On point two, I’ve already spoken to the change in net investment income relative to prior period. On point three, we are maintaining our full year guidance of 6% expense growth relative to 2024. And to help with seasonality in your models, we are targeting expense to be approximately $120,000,000 in q two, slightly lower than q one.
First quarter expenses were higher strengthening core capabilities with continued focus on tech delivery and middle office back office capabilities, overall resiliency in the client experience. Slide 40 has trending fees results. First on the left, AUM growth was strong in the quarter, increasing by approximately 8%. And on the right, you can see Chinese fees earnings of 30,600,000.0 for the first quarter, which includes 3,600,000.0 in fair value gains. Excluding those gains results were in line with Q1 twenty twenty four and still up from Q4.
The quarter’s results reflect China AMC’s ability to grow AUM and help offset some of the changes in fee rates we spoke to during our q four call. And on the bottom right, you can see the annual dividend received of $66,000,000. Slide 41 has the earnings contribution from companies in each segment. A couple of comments on strategic investments. First, Rockefeller earnings were in line with last year, and we saw strong business growth in core global family office business during the quarter, and earnings were down from last quarter primarily due to timing of some transactional revenue, which we expect to pick up in the coming quarters.
And Northleet’s first quarter earnings of 6,700,000.0 include strong annual incentive fee typically paid in q one, and earnings would have been closer to 4,000,000 excluding these fees. On Slide 42, at the bottom right, I’ll point out that at the end of Q1, our strategic investments, including unallocated capital now represent approximately $6,500,000,000 in value, that’s up over $1,000,000,000 versus Q1 of last year. And Slide 43 highlights execution against our capital allocation priorities, where you can see the return of capital to shareholders and decreasing leverage and our last twelve months trailing cash dividend payout ratio of 46% and is in line with last quarter. That concludes my remarks, and I’ll turn it over for questions.
Conference Operator: We will now begin the question and answer session. To withdraw your question, please press then 2. We will pause for a moment as callers join the queue. The first question today comes from Graham Ryding with TD Securities. Please go ahead.
James O’Sullivan, President and CEO, IGM Financial: Hi. Good morning. Luke, maybe I’ll start with you. I just wanna make sure I’m sort of getting your message correct. It sounds like you’re seeing signs of improving fund performance in some of your mandates.
Global equity quant is performing well, and you’re rolling out new products around that vertical. Is this what you think the pieces are that will turn flows positive? And if so, is that a 2025 dynamic or does it take longer to to sort of turn the ship?
Kyle Martin, Head of Investor Relations, IGM Financial: Thanks, Graham. Yes, absolutely. On Page 27, especially looking at the period from December 31 to where we’re sitting right now, we have a number of boutiques that really do their best work in an environment like this, where things are much broader and there is some volatility. So within quant and global equity income, those are very strong and just continuous, and they continue to put on strong numbers. And then beside them, in some of the boutiques that did favor that narrow Namibia like environment, like our durable growth, blue water boutique, our greenshift environmental thematic boutique and our high quality boutique.
Those three boutiques have now really delivered a strong year to date performance, and you can start to see the one year, the three year and other numbers changing favorably. So we feel there’s a lot of momentum and a lot of interest to lean in. And to your point, we are seeing a lot of momentum in global equity and income and quant as well as in the new products that we’ve launched in 2024 and 2025. Will we be positive in retail in 2025? That’s our hope.
We’re pushing with all we got, and we certainly have a lot of things going into right now.
James O’Sullivan, President and CEO, IGM Financial: Okay. Great. And then I’ll stick with you for one more. Just on the on the private asset side, can you sort of give us an update on what you are focusing on either with Northleaf or other managers? And what are you doing in terms of marketing these funds or looking to potentially add?
Kyle Martin, Head of Investor Relations, IGM Financial: So we’ve got our four products in market right now across infrastructure, private equity, private credit. And we’ve been focused for the last couple of years on removing every single impediment that’s properly including these products in retail investment portfolios. Those impediments have included scale. The process is scaling nicely. We’re at about $500,000,000 across the four products now.
Things like RF scalability, where we’ve required extensive release and now have it to make sure the products can fit in registered plan. And the other impediment has been educating advisors, making sure dealers have the right licensing to sell the products, making sure advisors are educated. And with our sales team across the country, we’ve been doing a good job in getting noticed. So we are feeling we’re at tipping point. Last thing we’ve been very focused on is making sure the products are approved on all dealer shelves, and we’ve been making very good progress on that in the last twelve months.
And then on promotional activities, we’re quite excited. We have an event in London, England at the end of this month, where we have about 89 advisers coming who collectively represent tens of billions of AUA. And we are expecting that to provide a lot more momentum to the product. And as mentioned, we do have a fifth product coming, a multi asset product later in the year. So this is feeling like a tipping point moment.
And yes, these products, we call them the missing middle. They properly belong in retail investors portfolios, and we’re so excited to see the ones that are leading the way on it.
James O’Sullivan, President and CEO, IGM Financial: And is there any opportunity to sort of push on to sort of define contribution platforms with those products?
Kyle Martin, Head of Investor Relations, IGM Financial: Or is it more of a, like, a retail financial adviser is the focus? Yes. That’s our hope for Northleet. In Canada and beyond, for any client who’s got a target date solution where target date 30, target date 40, whatever the case might be, private asset classes did very well. And we do expect that those asset classes will evolve into group platforms over the next decade.
They just sit there.
James O’Sullivan, President and CEO, IGM Financial: Okay. Sounds sounds good. And then, Damon, similar theme, can you just give us an update on how much of your discretionary discretionary AUM today would be in private assets and sort
Kyle Martin, Head of Investor Relations, IGM Financial: of how you how you’re thinking about that vehicle and asset class from sort of the top of the house? Yeah. So if you were if you were to take me down in terms of the total amount of assets, it would be approaching about $6,000,000,000 when you include our real property fund. We have our strategy is much like Luke’s and we believe that private assets deserve a place in every single client portfolio. It doesn’t matter if they’re mass market, massive or high net worth or ultra high net worth.
What we want to do is we want to be able to provide those solutions both in managed money solutions, but also a la carte leveraging Mackenzie’s lineup through OWM. So we’ve been able to do both of those things, and we will increase access to private access. It’s not just Northleaf, it’s also through Cigar and a number of other managers that that we have access to.
James O’Sullivan, President and CEO, IGM Financial: Okay. Excellent. Thank you.
Conference Operator: The next question comes from Tom MacKinnon with BMO Capital. Please go ahead.
James O’Sullivan, President and CEO, IGM Financial: Yeah. Thanks very much. Good morning. Just a question with respect to Mackenzie, the impact on the net management fee rate. I think he’s already suggested what the decline would be just due to the mix by adding some institutional.
Now
Kyle Martin, Head of Investor Relations, IGM Financial: if I
James O’Sullivan, President and CEO, IGM Financial: look here, ETFs is, albeit, smaller as a percentage of the Mackenzie assets. It’s really been the growth vehicle in terms of flows or one of the bigger big momentum there, and it’s certainly on the industry front there. You mentioned these active ETFs really gaining traction. I’m just wondering, as the mix potentially shifts to more and more active ETFs, does that have any impact on the net management fee rate?
Kyle Martin, Head of Investor Relations, IGM Financial: Good question, Tom. So the ETF structure, when we brought active fixed income and now active equity market in ETF form, we price them agnostically. So whether you choose to buy the mutual fund or the ETF, generally, you’re paying the same price for the services that you’re getting. So if someone purchasing retail active ETF, you can expect the margins to be very similar. If they start using a different ETF types like better beta will be lower down with pricing continuing.
And of course, straight beta, capitalized benchmarking is going to be a much lower fee. But for the active equity and the active fixed income, they’re priced in line with the mutual fund structure.
James O’Sullivan, President and CEO, IGM Financial: Okay. Priced in line, not from a from a fee rate perspective? Because I think you mentioned margins being similar, but price and
Kyle Martin, Head of Investor Relations, IGM Financial: fee rate perspective. Not from a fee rate perspective. You you’ve got some. The fees are very the fees are identical for the the services being provided. The only difference in fee between the mutual fund ETF tends to be administration because there isn’t the same service attached to ETF, but the management fees are identical.
James O’Sullivan, President and CEO, IGM Financial: Okay. And then I believe you said there’s a billion expected in the second quarter in terms of institutional flows. I think there was something like 350,000,000 out in April in institutional redemptions. So is this billion on top of that? What drove the redemption and what’s driving the billion coming in?
Kyle Martin, Head of Investor Relations, IGM Financial: Yeah. Good question. We we fueled some that that ETFs in Hong Kong run by our sister company, China MC Hong Kong. There was a rebound there, let’s say, dollars $350,000,000,000 out in April. And the $1,000,000,000 of the awards that we announced last quarter, that will be coming in May and June.
And we also are seeing some I didn’t mention it. We are seeing good fall on business, and and so we do have another award in the hundreds of billions of dollar range that should fund in q three as well.
James O’Sullivan, President and CEO, IGM Financial: Okay. Thank you.
Conference Operator: As a reminder, if you would like to ask a question, please press then 1 to join the question queue. The next question comes from Jamie Goin with National Bank Financial. Please go ahead.
Kyle Martin, Head of Investor Relations, IGM Financial: Yeah. Thanks. Just looking for
James O’Sullivan, President and CEO, IGM Financial: a quick update on the Rocketseller. Obviously, some good success since acquisition and acquiring inorganically. What is what is the capital position look like over there at Rocketseller? Is there still a loss of capacity to continue to run at these rates? Or maybe a quick refresh on where we are there?
Kyle Martin, Head of Investor Relations, IGM Financial: Yes, James. There’s the capital structure remains strong. There’s lots of capacity, which I don’t think is a surprise given the credit markets out there. There is lots of capacity for them to borrow as needed to fund advisor acquisitions. And in fact, they have meaningfully increased their acquisition target for 2025 relative to 2024.
So the business overall is going very well. I mean there’s really no substantive change. The Rockefeller Global Family Office business is performing as expected. They remain a destination of choice for wirehouse advisors looking to leave. And I’d also acknowledge the slowness that we’ve spoken about in past quarters with respect to the M and A business, that continues.
And growth in the asset management business is modest. The delta to what we might have originally expected has nothing to do with the core business. The core business is rock solid. It’s really related to M and A and to asset management. Okay.
And and the the profitability of the business,
James O’Sullivan, President and CEO, IGM Financial: you know, I think when when the acquisition was made,
Kyle Martin, Head of Investor Relations, IGM Financial: it was it was stated that
James O’Sullivan, President and CEO, IGM Financial: it would replace the the earnings of IPC, I believe, in in ’25. Is that is that still the case? Or is there a little bit longer runway here before we we return a profit on Rockefeller?
Kyle Martin, Head of Investor Relations, IGM Financial: Yes. Hi, James. It’s it’s Keith here. We would expect Rockefeller from our portion share to turn positive in the second half of the year. I’d say there’s still work to do that replace ITC’s earnings.
As James mentioned, you know, the m and a business and the asset management business are are a little bit slower, but, you know, the core business is performing well in line with expectations. But I would say it’s pushed off a little bit. And just last one. Since you since you
James O’Sullivan, President and CEO, IGM Financial: guys called it out or Damon called it out in the the IG Wealth section around mortgage business and insurance. It seems like, you know, top line or, you know, KPIs are growing nicely, but it’s we’re not seeing a flow through into earnings necessarily. It’s been kinda flat from a
Kyle Martin, Head of Investor Relations, IGM Financial: quarterly basis for for for a
James O’Sullivan, President and CEO, IGM Financial: couple years now. Is there should I take this? Is there an active push to to grow these businesses? And what do you need to do to to be able to get those earnings to sort of get out of its, you know, last several quarter run rate?
Kyle Martin, Head of Investor Relations, IGM Financial: Yeah, Jamie. It’s Damon. I’ll start, and then Keith will jump in. So I’ll say to you, first off, that there is 100% an active push to to grow this business. We believe firmly that mortgages and the mortgage whole credit discussion is integral part of financial planning discussion.
So that’s number one. Number two, it a process here. If you remember correctly, when we got out of the National Bank relationship, our mortgage book was actually shrinking. We’ve been able to stabilize that business now, and now we’ve started to grow it. So it’s more of a process than anything, but we’ve certainly turned the corner and I feel quite bullish on this business going forward.
Keith? Yes. Just to add, James. So as David mentioned, mortgage under administration has stabilized, which is great. And so from this point, growth and then we’ll see growth coming in the earnings side.
I’d also highlight to just for this quarter and the next quarter, there’s some higher margin business rolling off from five years ago. And so you’re seeing that this quarter, you’ll see a little bit of the next quarter, but that we should see improvement from in the second half of the year. But on the mortgage business, kind of expect similar results next quarter, but great opportunity to grow and grow earnings as we grow the mortgage under admin. K. Thank you.
Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Kyle Martin for any closing remarks.
Kyle Martin, Head of Investor Relations, IGM Financial: Thank you, Betsy. And once again, I’d like to thank everyone for joining the call with us this morning. And Betsy, I think with that, we can close-up the call.
Conference Operator: That brings to a close today’s conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.
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