Finally a sigh of relief from the mutual fund industry. IGM Financial , which owns Investors Group and Mackenzie, reported first quarter results last week that beat expectations, a promising sign for a sector that has endured some hard times during, and coming out of, the financial crisis.
The underlying fundamentals are obvious. Stronger markets make life much easier for asset managers. But more importantly, investor confidence is finally picking up. Although equity markets have had some strength for a while, the debt crises last year took a hit on rising investor trust.
In IGM's case, the firm's first quarter mutual fund net sales almost doubled over a year earlier, to $534-million. Moreover, even though Mackenzie's total flows resulted in net outflows of $7-million in the first quarter, that figure was down substantially from the $182-million in net outflows record in the first quarter of 2010.
And industry wide, fund flows are shifting back into higher margin equity funds, noted TD Securities analyst Doug Young.
Still, there are many reasons to be cautious. Chiefly, "while the improvement in Mackenzie net flows is positive, we are maintaining a cautious outlook as strong demand in RRSP season provided a seasonal lift," noted CIBC analyst Paul Holden. That lift will certainly felt across the whole industry.
More specifically for IGM, key Saxon portfolio manager Suzann Pennington is leaving to join CIBC Asset Management, which is a big loss for the firm.
Tim Kiladze