gENUITY RESEARCH NOTE: Canadian Asset Managers : Preliminary May IFIC results

June 5, 2006 Karin Huo, CA, CFA – 416.687.5311 karin.huo@genuitycm.com
Mario Mendonca, CA, CFA – 416.687.5265 mario.mendonca@genuitycm.com

Preliminary May IFIC results

AGF Management Ltd (AGF.NV) 21.50$ Hold $26.00

CI Financial (CIX) 31.39$ Restricted Stock Recommendation Return Restricted

Dundee Wealth Mgmt (DW) 11.65$ Hold $13.00

IGM Financial (IGM) 46.55$ Hold $53.00

• Based on a sample of preliminary data, IFIC estimates net new sales for the month of May to be between $100 million and $600 million. This compares to net new sales of $537.1 million in the prior month and $1.1 billion in the prior year. Long-term net new sales are estimated to be approximately $883 million, while money market funds are estimated to have experienced net redemptions of $532 million.

• Industry assets under management at the end of May 2006 are estimated to be between $588 billion to $593 billion, down approximately 2.8% from last month’s total of $608 billion.

• Uncertain market conditions resulted in most of the major indices falling in May. The S&P/TSX Composite Index fell 3.8%, led by a decline in energy and materials. In the rest of the world, the S&P 500 was down 3.1%, the NASDAQ was down 6.2%, and the MSCI World Index was down 3.7%. Foreign equity funds were negatively impacted by the continuing strength of the Canadian dollar.

• RBC Asset Management continues to lead the industry with net new sales of $267 million in May. CI Financial was second with net new sales of $238 million, and Dynamic Mutual Funds was third with net new sales of $110 million.

• CIBC Asset Management was the worst performer this month with net redemptions of $296 million. AIM Trimark was close behind with net redemptions of $281 million. The other companies reporting net redemptions this month include AIC, National Bank Mutual Funds, TD Asset Management, Altamira, Scotia Securities, and AGF Management. AGF was unable to continue its trend of positive net new sales this month and reported net redemptions of $11 million.

• The results from the six major banks (BMO, BNS, CM, NA, RY, and TD) were again mixed this month. TD Asset Management reported its first month of net redemptions since September 2004, primarily from its money market funds. Overall, the six major banks generated net redemptions of $125 million in May, down from net new sales of $549 million (55.2% of industry) in the prior year.

• According to IFIC, the four independent public asset managers reported much better results than the banks this month. Overall, they reported net new sales of $426 million (121.4% of industry), versus net new sales of $158 million (15.9% of industry) last year.
Preliminary industry results Last Friday, the Investment Funds Institute of Canada (IFIC) released its preliminary estimates for the Canadian mutual fund companies for May 2006.

NET NEW SALES Source: IFIC Industry net new sales and assets Based on a sample of preliminary data, IFIC estimates net new sales for the month of May to be between $100 million and $600 million. This compares to net new sales of $537.1 million in the prior month and $1.1 billion in the prior year.

Long-term net new sales are estimated to be approximately $883 million, while money market funds are estimated to have experienced net redemptions of $532 million. Industry assets under management at the end of May 2006 are estimated to be between $588 billion to $593 billion, down approximately 2.8% from last month’s total of $608 billion. Volatility in equity markets reduces assets under management Uncertain market conditions resulted in most of the major indices falling in May. The S&P/TSX Composite Index fell 3.8%, led by a decline in energy and materials. In the rest of the world, the S&P 500 was down 3.1%, the NASDAQ was down 6.2%, and the MSCI World Index was down 3.7%. Foreign equity funds were negatively impacted by the continuing strength of the Canadian dollar.

RBC Asset Management leads the industry again in May RBC Asset Management continues to lead the industry with net new sales of $267 million in May. CI Financial was second with net new sales of $238 million, and Dynamic Mutual Funds was third with net new sales of $110 million. Eight companies reported net redemptions in May, and four of those companies were banks. CIBC Asset Management was the worst performer this month with net redemptions of $296 million, coming from both long-term and money-market funds. AIM Trimark was close behind with net redemptions of $281 million. The other companies which reported net redemptions this month include AIC, National Bank Mutual Funds, TD Asset Management, Altamira, Scotia Securities, and AGF Management. The results from the six major banks (BMO, BNS, CM, NA, RY, and TD) were again mixed this month with only two of the banks reporting positive net new sales. TD Asset Management reported its first month of net redemptions since September 2004, primarily from its money market funds due to higher interest rates and market volatility. Overall, the six major banks generated net redemptions of $125 million in May, down from net new sales of $549 million (55.2% of industry) in the prior year. Canadian asset managers According to IFIC, the four independent public asset managers reported significantly better results than the banks this month. Overall, they reported net new sales of $426 million (121.4% of industry), versus net new sales of $158 million (15.9% of industry) last year. The remainder of our discussion of the asset managers focuses on the data from the separate press releases provided by the companies that disclose net sales and AUM.

AGF Management

AGF Management reported net redemptions of $11.0 million, versus net new sales of $1.9 million last month and net redemptions of $205.2 million last year. While AGF was unable to continue its trend of positive net new sales this month, the magnitude of redemptions in May 2006 was well below May 2005. Mutual fund assets under management were $23.7 billion, down 4.0% from $24.7 billion in the previous month. Weak investment markets as well as a rising Canadian dollar reduced assets under management by $978.0 million in May. Total assets under management (including institutional and Private Investment Management) were $37.7 billion, down 3.6% from the previous month. Although AGF reported net redemptions in May, gross sales of $366.3 million were up 110% from the previous year. We continue to believe that AGF has implemented the right initiatives to address its difficulties and the company is well positioned to maintain its sales momentum throughout the rest of the year.

CI Financial

CI Financial reported gross sales of $932 million, up from $720 million last month and $675 million last year. Net new sales (excluding reinvested distributions) were $227 million, versus $131 million last year. Total fee-earning assets as of May 31, 2006 were $74.2 billion, down 2.6% from $76.2 billion last month. Mutual fund assets were $55.8 billion, down 2.7% from the previous month and up 16.6% from last year.

Dundee Wealth Management

Dundee Wealth Management reported net new sales of $175 million in May, versus $82 million last month and $142 million last year. Total assets under management (including Dundee Securities Managed Accounts) were $21.3 billion, down 2.7% due to negative market performance. Dundee continues to report solid and consistent sales results each month, and we believe that it will continue to do so throughout the rest of the year. We continue to rate Dundee Wealth a HOLD with a target price of $13.50. IGM Financial IGM Financial reported total mutual fund assets under management in May of $96.8 billion, down 2.7% from the previous month. Net sales were $85.5 million, down 43% from $141.9 million last year.

IGM Financial

While Investors Group continues to generate solid sales results, Mackenzie Financial reported its first month of net redemptions since January 2005.