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AGF aims to boost assets with institutional business

AGF Management Ltd. plans to aggressively pursue pension and other institutional business to boost assets and increase fee revenue, its chief executive officer Blake Goldring said yesterday.

"We are focused on expanding sales in the institutional space," Mr. Goldring told analysts.

"We have opened an office in Boston and we have another office to open in Hong Kong toward the end of this year."

He made the comments after the Toronto-based mutual fund company reported that profit tumbled by nearly half in the third quarter amid global stock market declines and higher provisions for loan losses.

Profit in the quarter, which ended Aug. 31, fell to $22.8-million from $41.1-million a year earlier.

Earnings per share slid to 25 cents from 46 cents. AGF is keeping its quarterly dividend of 25 cents.

AGF recently won new institutional business as an external manager to the segregated-fund lineup sold by the investment arm of insurance giant Manulife Financial Corp.

Next month, Manulife will add some of AGF's funds to its GIF Select program. The product, known as the AGF Bundle, includes AGF Canada Class, AGF Global Equity and AGF Canadian Bond Fund.

The push on the institutional side comes as AGF continues to suffer from net redemptions in its mutual funds although the level of outflows has slowed from a year ago.

Total assets under management declined 15.8 per cent to $41-billion at Aug. 31 from $48.7-billion a year earlier, due to market depreciation and net redemptions.

At the firm's trust company unit, AGF Trust, loan assets declined 14.1 per cent from a year ago, while net interest income fell 12.5 per cent.

This drop is part of the trust's strategy to slow loan growth and suspend new offerings of the lower-margin lending products to shore up its regulatory capital position.

"We continued to focus on responsible management of our loan portfolios and increased credit and collections activities to mitigate default risk and reduce potential losses," Mr. Goldring said.

"The strategy resulted in a much improved performance at AGF Trust in the third quarter compared with the first six months of this fiscal year," he said.

"Provisions for loan losses were $7.2-million, up from $3.4-million in the third quarter of 2008, but down from $13.9-million in the second quarter."

Mr. Goldring said AGF's stock price has performed well since the start of this fiscal year after experiencing some dramatic lows earlier that were similar to many financial stocks.

The executive took advantage of AGF's stock price decline to boost his family's stake in the firm during the month when it hit a 52-week low of $6.74 a share.

"I bought a significant number of shares - about half a million shares - in February for our family," he said.


AGF Management


Yesterday's close

$16.17, up 9 ¢


© 2007 The Globe and Mail. All rights reserved.

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