IGM Financial Inc. has reported a 21-per-cent increase in fourth-quarter profit even as net redemptions in its mutual funds mushroomed to $1.4-billion.
And fund sales in the current registered retirement savings plan (RRSP) season are not as buoyant as early 2011 because investors are still jittery due to last year's stock market volatility, IGM Financial executives told analysts on Friday.
"Things are little softer coming out of the gate," Murray Taylor, co-chief executive officer acknowledged during a conference call. "Last year, we had the benefit of a good fourth-quarter rally [in 2010] I think that improved investor sentiment."
Profit at IGM Financial in the latest quarter climbed to $230.6-million, or 89 cents a share, up from $189.9-million, or 73 cents, a year earlier. Total revenue fell to $649.6-million from $694.9-million.
Total assets under management for the Winnipeg-based wealth management firm, a subsidiary of Power Financial Corp., tumbled 8 per cent to $118.7-billion as of Dec. 31 from a year earlier.
IGM Financial owns Investors Group, which sells funds and other financial products through its own network of 4,608 financial advisers, while its Mackenzie Financial Corp. unit sells funds through independent advisers.
Investors Group's mutual fund net redemptions grew to $158-million in the fourth quarter, compared with $38-million a year earlier. Mutual fund assets fell 6.6 per cent to $57.7-billion by Dec. 31 from the year-before period.
Mackenzie Financial suffered from the most net redemptions with nearly $1.3-billion in outflows in the quarter, up from $267-million a year earlier. Its mutual fund assets fell 9.9 per cent to $39.2-billion by Dec. 31 from the previous year.
Unlike the first quarter of last year when global equity sales were strong in the industry, "that category is just not as attractive today to investors" because of the European debt crisis, said Charles Sims, CEO of Mackenzie Financial and co-CEO of IGM Financial.
"What we are seeing [in this RRSP season]is more focus on income-oriented and conservative product," Mr. Sims said. Last year, there were more domestic and global stock funds being sold alongside corporate bond and other fixed-income funds, he noted.
Last year, Mackenzie sold its M.R.S. Trust Co. to B2B Trust, a unit of Laurentian Bank of Canada. As part of the transaction, the bank will soon start selling 40 Mackenzie mutual funds in its network.