IGM Financial Inc. reported a 23 per cent drop in third-quarter profit on Thursday as lower fees on mutual funds took a bite out of its bottom line, and investors withdrew more cash.
The wealth management firm's latest quarterly results, which came out after financial markets closed, are being watched closely by analysts because it is the first look at the impact of IGM's move to lower fees on many funds sold by its Investors Group subsidiary.
Reductions in management fees on selected Investor Group funds affects about two-thirds of the firm's assets. The company, which sells funds through its own financial networks, has also suffered from poor performance on some funds.
In May, Investors Group chief executive officer Murray Taylor said lower fees were necessary to be competitive. "There has been greater consciousness around the fee question" amid low interest rates and volatile stock markets, he said.
Profit for IGM, which also owns Mackenzie Financial, tumbled to $186.9-million, or 73 cents a share, from $244-million, or 94 cents a share, a year earlier. Revenue fell to $634.1-million from $673.8-million.
Rebounding stock markets, however, helped boost total assets to $119.3-billion from $116.7-billion a year earlier.
Winnipeg-based IGM, a subsidiary of Montreal-based Power Financial Corp., said that mutual fund net redemptions grew to $314-million at Investors Group in the quarter from $162-million a year ago.
Net redemptions at its Mackenzie Financial unit fell marginally to just over $1-billion in the third quarter from $1.2-billion in the year earlier period.
IGM has scheduled its analysts' conference call for Friday morning.