Improved Flows and Market Gains Expected to Lift IGM Financial's AUM, Revenue, and Profitability

While IGM Financial has historically generated solid operating margins and maintains a leading share in the Canadian mutual fund market, we've been less than impressed by its ability to generate organic growth. Both its asset management (Mackenzie Investments) and wealth management (Investors Group Wealth Management and Investment Planning Counsel) arms have consistently struggled to generate positive flows, with organic growth being only moderately positive for both subsidiaries the past five years despite meaningful price cuts during that time aimed at making their offerings more competitive. To us, this is a sign of the weaker competitive position the firm has had historically, with poor investment performance, higher fees, and a reliance on a closed advisor network leave the firm negatively exposed to secular headwinds for the industry.