IGM Financial for income only…

IGM Financial is a leading diversified wealth and asset management company. It is a member of the Power Financial Corporation group of companies and is one of Canada’s largest distributors of mutual funds and other managed asset products. IGM has a presence throughout North America, Europe, and Asia and caters to both individual and institutional investors, and advisors. The firm manages assets worth $165 billion. 

IGM Financial operates through IG Wealth Management, Mackenzie Investments, Investment Planning Counsel, and strategic investment businesses. It provides a broad range of financial and investment planning services to its clients. IGM is well-positioned to tap the growth opportunities across Canada, China, and Fintech through its diverse range of products, solutions, and geographies. The firm is focusing on improving client satisfaction through various initiatives such as technological enhancements, secure online account access, and new product offerings. Experienced leadership team, financial strength and scale, and backing of Power Financial group of companies are compelling business advantages for IGM Financial.

Investment Data

Revenue Growth & Market Exposure

As a leading wealth and asset management company, IGM Financial has been growing its assets under management at a steady pace over the years. The company’s core business comprises of wealth and asset management, and strategic investments. IGM Financial is well-positioned to meet the needs of Canadians through its two operating companies focused on wealth management, IG Wealth Management and Investment Planning Counsel, and Mackenzie Investments continues to deliver strong investment performance. It benefits from its vast and successful portfolio of financial products and solutions. Its ETF business is sixth-largest in Canada just within four years of its launch. IGM’s strategic investments business also positions it well for future growth.

IGM Financial also benefits from being a member of the Power Corporation group of companies, which is a leading international management and holding company focusing on financial services in North America, Europe, and Asia. Over the years, IGM Financial has developed a scale to attract, retain, and develop its growing client base. IG clients also benefit from new product offerings and managed solutions, supported by partnerships with advisors like Blackrock, T. Rowe Price, Pimco, and Mackenzie Investments. Clients across the IGM group of companies achieved an average investment return of 13% during 2019. IGM also achieved a growth of $10 billion in assets under administration and record-high levels of mutual fund sales during the year.

IGM witnessed an 8% increase in AUM in April and investment fund net sales also went up. Q1 saw one of the steepest equity market declines in major indices. IGM Financial is one of the largest foreign investors that participates in the Chinese domestic asset management industry. Its share of China Asset Management’s earnings of $8.9 million increased by more than 20% from the last year. IGM continues to invest in modernizing its digital platforms and technology infrastructure. These investments are directed towards better managing client relationships, improving efficiency, and digitizing workflows.

Dividends

IGM Financial has returned more than $537 million in dividends to its shareholders and sports a total shareholder return ratio of 27.4% in the last year. It also paid $100 million to shareholders through share repurchases. It has a strong balance sheet and cash flow. IGM has an annual dividend yield of 6.6% and a payout ratio of 72%. The company last raised its dividend by more than 4% and has grown its dividends at a rate of 1% CAGR in the last decade.

IG Wealth Management earns fee-based revenues in the conduct of its core business activities. It also earns fee revenues from the provision of brokerage services and the distribution of insurance and banking products. Fee-based revenue increases earnings visibility for the company. Its clients continue to migrate to a fee-based IG advisory account. IGM is favourably placed to benefit from growth opportunities through investments in fintech and Chinese markets. Positive flows in mutual fund and ETF businesses, and growth in institutional business should act as tailwinds for IGM. Though IGM witnessed client redemptions as a result of the COVID-19 impact, the diversification of its clients’ portfolios helped to mitigate extreme market volatility. The company continues to gain market share and is witnessing significant traction across retail, strategic alliance, and institutional channels.

Competition

The market for financial advisors is extremely competitive. IGM competes with other financial service providers, investment managers, and product and service types. Broad and diversified distribution,  product capabilities, leading brands, strong client relationships, and powerful Power Financial group’s backing are IGM’s competitive strengths. Fiera Capital Corp, CI Financial, Brookfield Asset Management, ONEX Corporation, etc. are its leading competitors.

Bottom Line

A bouquet of successful brands and a holistic approach to financial planning and investing should support IGM Financials’ future growth. As part of the Power Financial group of companies, IGM Financial benefits from expense savings, access to distribution, products, and capital. 

The concern with IGM is the fee transition from mutual funds to ETFs. A company like BlackRock is already leading the ETF spaces where as IGM has to increase fee-based advice and assets under management to offset the move away from mutual funds over time. The change is happening slowly so they should continue to support the dividend but I can’t speak for the stock price.