Improved Equity and Credit Markets Should Lift AGF Management’s Flows and Revenue

While AGF Management's struggles are far from over, we believe the firm is on the right track. Long bouts of investment underperformance and increased competition have weakened the firm's competitive position in the Canadian market the past decade. The company also relies heavily on third-party distributors than its peers, with the Big Six banks and insurance companies (which handle the bulk of fund distribution in Canada) looking to expand their own fund manufacturing operations. While embedded commissions endure, we expect the growth of fee-based accounts and increased transparency around fees and performance to put pressure on active managers with higher-than-average fees and below-average performance.