AGF Management Ltd, one of Canada's largest independent fund managers, expects its push into the institutional segment and infrastructure-related investments to drive growth over the next few years, its top executive said. The shift is part of a broader strategy to diversify beyond its core mutual fund business, which has struggled with redemptions by retail investors since the 2008 financial crisis.
AGF aims to reach C$45 billion ($34.29 billion) to C$50 billion in assets under management in the next three to four years, Chief Executive Blake Goldring said in an interview. AGF managed about C$35 billion in assets at the end of June. Strong growth in the institutional investor base could double the segment's assets under management in three to five years from about C$14 billion currently, he said. AGF's existing institutional clients include sovereign wealth funds, pension plans and endowments.
The Toronto-based company is also looking for gains in the high net-worth segment, where it anticipates the assets it manages for the very wealthy could rise from C$4.5 billion to about C$6 billion in the next three years. "It's an area of ongoing growth as we're seeing a shift in wealth," Goldring said. AGF's push beyond traditional mutual funds follows a rough ride for its own investors. The stock, which hit C$40 in 2007, was at C$5.90 on Tuesday. It has dropped about 39 percent since AGF slashed its dividend by about 70 percent in December.
Goldring said the company is taking a more balanced approach to capital allocation, combining a dividend, share buy-back plan and investment in growth in infrastucture-related areas. The move into such investments reflects the fact that clients are increasingly risk-averse, Goldring said. "They're telling us, 'Don't hit the ball out of the park, just get me onto the first or second base'," he said.
AGF's infrastructure-related exposure includes InstarAGF, a joint venture with Instar Group Inc. Earlier this year, a consortium including InstarAGF and AGF acquired the passenger terminal at Toronto's downtown Billy Bishop Airport from privately held Porter Aviation Holdings Inc. Infrastructure is less susceptible to potential increases in interest rates, making it an appealing alternative to fixed income and real estate, said Gregory Smith, chief executive of InstarAGF.