Credit and Equity Market Volatility Will Continue to Affect Flows and AUM Levels at AGF Management

While we believe that AGF Management's struggles are far from over, we feel that the firm is on the right track. Bouts of investment underperformance and increased competition have weakened the firm's competitive positioning in the Canadian market over the past decade. The company also relies more heavily on third-party distributors than its peers, with the big six banks and insurance companies (which handle the bulk of fund distribution in Canada) looking to expand their own fund manufacturing operations. While embedded commissions have endured, we expect the growth of fee-based accounts, and increased transparency around fees and performance, to put pressure on active managers with higher-than-average fees and below-average performance.