March 28, 2012 / 2:53 PM / 6 years ago

UPDATE 2-AGF Management profit falls, sees net fund redemptions

* Profit down, in line with expectations

* Net mutual fund redemptions offset market gains

* Shares edge lower

March 28 (Reuters) - Canadian fund manager AGF Management Ltd’s quarterly profit fell 11 percent, in line with market expectations, as rising financial markets boosted mutual fund assets but failed to offset another quarter of net redemptions.

AGF said on Wednesday that earnings fell to C$26.1 million ($26.3 million), or 27 Canadian cents a share, in its first quarter, ended Feb. 29, down from C$29.2 million, or 32 Canadian cents a share, in the same period a year earlier.

Revenue fell 4 percent to C$155.5 million from the year-before quarter and was down 3 percent sequentially although continued cost controls helped mitigate the slide.

AGF, one of Canada’s three big independent asset managers, was hard hit by the 2008 global financial crisis and has struggled to regain its footing. Its lineup of mutual funds has not performed as well as those of competitors, contributing to net redemptions in the quarter.

“The first quarter’s earnings do little to assuage our concern that (AGF) will continue to underperform its peers on the back of lower net mutual fund sales,” Barclays Bank analyst John Aiken said in a report.

“(It is) notable that it still cannot generate positive flows, even in the seasonally high RSP (retirement savings plan) season. That said, it appears to be much more successful in its institutional business, which has been reporting steady growth and incremental mandate wins,” he added.

Total assets under management fell 8.8 percent to C$47.8 billion from a year earlier but were up 3.9 percent quarter on quarter to C$47.8 billion as gains in markets boosted performance.

“With the strong rebound in North American equity markets, coupled with the investments we have made in our asset management platform, we feel AGF is well positioned to experience positive momentum in its performance and continued growth in our assets,” Chief Executive Blake Goldring said in a statement.

Amortization related to intangible assets added through AGF’s acquisition of Acuity Funds Ltd in February 2011 hurt earnings by 4 Canadian cents a share.

Shares of AGF edged lower in early trade on the Toronto Stock Exchange on Wednesday, down 3 Canadian cents at C$15.72 in a broadly weaker market.

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