Investors Group Wealth Management and Mackenzie Investments Form the Core of IGM Financial

While IGM Financial has historically generated solid operating margins and held a decent share of the Canadian mutual fund market, we've been less than impressed by its ability to generate organic AUM growth. Both its asset-management (Mackenzie Investments) and wealth-management (Investors Group Wealth Management) arms have consistently struggled to generate positive flows, with organic growth only modestly positive the past five years for the combined subsidiaries, despite meaningful price cuts aimed at making their funds more competitive. To us, this is a sign of the weaker competitive position IGM has relative to the Big Six banks, with poor investment performance, higher fees, and a reliance on a closed advisor network leaving the firm more exposed to the industry's secular headwinds.