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The firm launched two retirement income products, Mackenzie Monthly Income Conservative Portfolio and Mackenzie Monthly Income Balanced Portfolio.Stefan Klein/Getty Images/iStockphoto

Despite a rocky start this year, the CEO of Mackenzie Financial Corp. is optimistic the company will start to see growth as it becomes more diversified in its offerings.

After some positive net sales traction in the first half of 2014, Mackenzie's retail division has experienced a rough ride over the past three consecutive quarters, with net redemptions and substantial net outflows in April, 2015, says Scott Chan, an equity analyst with Canaccord Genuity.

Mutual-fund sales for the first quarter of 2015 were $2-billion compared to $2.4-billion in the prior year. Mutual-fund net redemptions for the first quarter were $106-million compared to net sales of $354-million a year ago.

Earlier this month, analysts at Canaccord Genuity downgraded IGM Financial Inc., Mackenzie's parent company, to "hold" from "buy" and cut their price target to $47.50 from $50. The downgrade was a direct reflection of the net redemption trends at Mackenzie's retail funds and constant management fee pressure, such as the increase in fee-based products, Mr. Chan says.

One of the biggest challenges for Mackenzie lies in its largest fund family – Cundill funds – which has seen rising net redemptions since last year. In the first quarter of 2015, net redemptions for the Cundill funds totalled $346.4-million, compared to $200-million in the same quarter last year.

"Last year, we had a very strong RRSP season with global equities being highly favoured, and then this year global equities became out of favour and we have the largest market share in that space. That created some performance challenges in both our Cundill and Ivy fund families," says Jeff Carney, president and CEO of Mackenzie Financial Corporation.

The Cundill follow deep-value investing mandates, which look to buy companies at a price far below what they are judged to be worth, with the expectation that they will bring stronger returns over the long term. Unlike traditional products where one is looking over a four- or five-year cycle to see performance play out, deep-value products follow more closely to seven-year cycles, Mr. Carney says.

"These products can have more volatility in them at times and you need to hold them for a longer time to get the full benefit of the investment process," he says. "Ivy is starting to bounce back and Cundill is still working through these challenging markets but it is not an easy market, from a valuation standpoint, for deep-value investors."

While the Cundill and Ivy fund families are still strong offerings within the company, Mr. Carney is also looking to include other investment ideas. Earlier this year, Mackenzie hired Michael Cooke as senior vice-president, head of alternative products. Mr. Cooke is well known in the industry as former head of distribution of Invesco Canada Ltd.'s ETF division, PowerShares Canada. He is currently looking at alternative products that could see Mackenzie add actively managed exchange-traded funds to product lineup later this year.

To help tackle the deaccumulation phase of seniors – when retirees have to start spending money versus saving – the firm launched two retirement income products, Mackenzie Monthly Income Conservative Portfolio and Mackenzie Monthly Income Balanced Portfolio. Both portfolios include absolute return strategies, REITs, commodities, equity income, and fixed corporate and sovereign bonds.

Mr. Carney, who joined Mackenzie two years ago, spent much of his career south of the border at investment powerhouses Fidelity Investments and Charles Schwab Corp. He says there is ample opportunity for further product development in Canada that could be beneficial to Canadian investors, such as risk parity investment products, where risk is purportedly spread more equally between asset classes than traditional asset allocation. These products, while popular in the United States, have yet to be approved by regulators for use in Canada.

"There is still a lot of room for innovation in Canada in terms of product space, and we want to be the player who brings that innovation to the market, but for some of those ideas you really have to push the regulators to be able to bring it here," Mr. Carney says.

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