CI Financial Corp. blamed market volatility for a 5 per cent drop in first-quarter profit, and warned that investor jitters could dampen near-term mutual fund sales.
Net sales of funds fell to $160-million during the quarter from $465-million a year ago. This decline occurred during the key registered retirement savings plan (RRSP) season when most mutual funds are sold.
“Gross sales are still muted in light of the market volatility over the past few years,” CI’s chief executive officer Stephen MacPhail said in a letter to shareholders.
“There is still significant concern over the ability of several European countries and the United States to manage their debt levels, and the ability of China to navigate through this soft economic period. These concerns still have the potential to cause periodic bouts of market volatility.”
Despite the market rally in recent months, “overall investor sentiment remains negative and gross sales continue to be below our expectations,” Mr. MacPhail said.
CI’s assets under management slid to $73.1-billon at April 30. Assets had already fallen 3 per cent to $73.4-billon at March 31 from $75.5-million a year earlier.
Profit at the Toronto-based wealth management firm declined to $94.6-million, or 33 cents per share, for the quarter ended March 31, from $100.1-million, or 35 cents a share, a year earlier. The prior year’s results included a non-recurring $3.5-million after tax from an insurance settlement.
Total revenue fell to $2.6-billion from $3-billion a year ago. CI’s Assante fund dealer unit saw revenue drop to $62.3-million in the quarter from $66.5-million.
CI generated $98.5-million in free cash flow in the first three months of this year compared with $98.2-million a year ago. During the latest quarter, it was able to reduce debt by $33-million, pay out $65.2-million in dividends to investors and buy back $6.5-million in shares.