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 caters to financial advisors and clients in Canada, and institutional investors throughout North America, Europe, and Asia. The firm’s assets under management and advisement were $196 billion as of September 2020. 

IGM Financial’s principal operating subsidiaries are IG Wealth Management and Mackenzie Investments. The company also operates through wealth manager Investment Planning Counsel and has strategic investments in Great-West Lifeco Inc., China Asset Management Co., and Wealthsimple Financial. It provides a broad range of financial and investment planning services to its clients.

IGM has realigned its reportable segments as Wealth Management (68% of EBIT), Asset Management (20%), and Strategic Investments and Other (12%). Experienced leadership team, financial strength and scale, and backing of Power Financial group of companies are compelling business advantages for IGM Financial.

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Key Investment Data

 


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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 wealth and asset management, and strategic investments.

IGM Financial is well-positioned to meet the needs of Canadians through its two operating companies, IG Wealth Management and Investment Planning Counsel, and Mackenzie Investments. 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 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 retain and develop its growing client base.

IGM 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 4% during the most recent quarter.

Gross client inflows in IG wealth management for the third quarter were $2.1 billion consistent with $2.2 billion in 2019. Mackenzie continued to clock positive retail net sales for the 16th consecutive quarter. The company’s EPS recorded the second highest adjusted EPS in its history. IGM Financial is one of the largest foreign investors that participates in the Chinese domestic asset management industry.

Its share of China AMC earnings increased by 36% YoY, to $10.5 million during the quarter. IGM continues to invest in modernizing its digital platforms and technology infrastructure. It incurred costs relating to restructuring and downsizing activities as well as impairment of redundant internally generated software assets. IGM also announced significant technology outsourcing and process automation milestones during the quarter.

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 generation. IGM has a generous dividend yield of 6.4% and a healthy payout ratio of 74%. The company last raised its dividend by more than 4% in 2014 and has grown its dividends at a rate of ~1% CAGR in the last decade.

IGM’s businesses cater to all aspects of clients’ wealth management and financial planning. IG Wealth Management earns fee-based revenues in the conduct of its core business activities, which increases earnings visibility for the company. Its clients continue to migrate to a fee-based IG advisory account.

IGM is favorably placed to benefit from growth opportunities through investments in fintech and Chinese markets. More than 45% of Mackenzie Investments’ mutual fund assets are in 4 or 5 star-rated funds by Morningstar. The acquisition of GLC Asset Management and Northleaf Capital Partners further bolsters its AUM and enhances product capabilities into private markets. These transactions are expected to be accretive to 2021 earnings.

Positive flows in mutual fund and ETF businesses, and growth in institutional business should act as tailwinds for IGM. The company continues to gain market share and is witnessing significant traction across retail, strategic alliance, and institutional channels. It is also focusing on High Net Worth and managed solutions for future growth.

IGM Financial (IGM) historical Yield
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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.

TickerKeyTickerCompanySectorIndustryScoreQuoteMarket CapP/EFPEEPSYield RawYieldPayoutRatioPaymentsDividendChowderGrowthRatingIncomeRatingTollboothAmbassadorAchieverAristocratKingCountryGraph
TSE:BAM.ABAM.ABrookfield Asset ManagementFinancial ServicesAsset Management0.4767.35106.2365.4165.411.020.00960.960.592040.520.085475Tollbooth - UnregulatedNONOYESNOCanada1
TSE:IGMIGMIGM FinancialFinancial ServicesAsset Management0.3844.0310.5213.0313.033.380.05115.110.666042.250.051115Consumable - DiscretionaryNONONONOCanada1
TSE:ONEXONEXONEX CorporationFinancial ServicesAsset Management0.3195.108.543.363.360.000.00420.420.094040.400.162923Consumable - DiscretionaryNONOYESNOCanada1
TSE:CIXCIXCI FinancialFinancial ServicesAsset Management0.3922.754.6610.0810.082.610.03163.160.305040.720.031614Consumable - DiscretionaryNONONONOCanada1
TSE:BIPCBIPCBrookfield Infrastructure PartnersFinancial ServicesAsset Management0.3780.903.630.000.000.000.03153.150.000042.040.031515Tollbooth - UnregulatedNONONONOCanada1
TSE:SIISIISprottFinancial ServicesAsset Management0.3145.981.1832.5732.571.480.02712.710.737041.000.027113Consumable - DiscretionaryNONONONOCanada1
TSE:FSZFSZFiera Capital CorpFinancial ServicesAsset Management0.4411.080.91141.80141.801.520.07587.587.713040.840.138554Consumable - DiscretionaryNONOYESNOCanada1
TSE:AGF.BAGF.BAGF ManagementFinancial ServicesAsset Management0.507.550.533.413.410.520.04774.770.142040.360.047715Consumable - DiscretionaryNONONONOCanada1

Bottom Line

As part of the Power Financial group of companies, IGM Financial benefits from expense savings, access to distribution, products, and capital. 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. IGM continues to execute on several partnerships with key firms to assist in the five-year transformation initiative to modernize its technology infrastructure.

IGM Financial (IGM) historical PE
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DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.