Credit and Equity Market Volatility Will Limit AGF's Flows and Affect Its AUM in the Near Term

We believe that while AGF Management's struggles are far from over, the firm is on the right track. Bouts of investment underperformance and increased competition have weakened the firm's competitive position in the Canadian market over the past decade. The company also relies more heavily on third-party distributors than its peers, with the Big Six banks and insurance companies (which handle the bulk of fund distribution in Canada) looking to expand their own fund manufacturing operations. While embedded commissions have endured, we expect the growth of fee-based accounts and increased transparency around fees and performance to put pressure on active managers with higher-than-average fees and below-average performance.