Q2 2025 IGM Financial Inc Earnings Call
Speaker #4: Thank you for standing by . This is the conference operator . Welcome to the IBM Financial Second Quarter 2025 Analyst Call and Webcast .
Speaker #4: As a reminder , all participants are in listen only mode and the conference is being recorded . After the presentation , there will be an opportunity to ask questions .
Speaker #4: To join the question queue , you may press star , then one on your telephone keypad . Should you need assistance during the conference call , you may signal an operator by pressing star , then zero .
Speaker #4: I would now like to turn the conference over to Kyle Martens Senior Vice President , Corporate Development and Investor Relations . Please go ahead .
Ended as a allowed us to be early investors in fast, growing Innovative platforms.
Examples of this include wealth simple, personal Capital Conquest nesto, clear, estate, and others that are being stood up as we speak.
And we continue to return Capital to shareholders during the quarter through both our strong dividend and our share repurchase program.
We are determined to repurchase more shares as we do, not believe the current price adequately reflects the strength of IG.
The very clear progress in McKenzie.
Value embedded in our strategic investments.
Let's move to slide 10, where I'll speak to the broader operating environment.
The first half of 2025 was characterized by periods of heightened volatility, most notably the month of April,
But as we moved through the second quarter in July uncertainty, and volatility, subsided returning markets to an upward trend.
overall, while much of the underlying uncertainty remains,
the average Canadians Diversified Investment Portfolio has achieved strong investment returns through July and over the last number of years.
Which is very much helped to support improving investor confidence.
Line 11 shows how improving investor confidence is supporting a stronger industry backdrop.
With industry, net sales returning to their previous upward trend.
Turning to slide 12.
Here you will see how earnings growth at all. 3 of our reporting. Segments contributed to igm's overall, 15% year-over-year growth
And on slide 13, we have robust client asset growth across each of our wealth and asset management businesses.
Which combined drove igm's. Aumn a up 21% over the past 12 months,
Contributing to this growth was McKenzie's momentum in the institutional and strategic Partnerships Channel.
Which continued through the second quarter and into July.
No change there.
New over the last 4 months is a very notable, net flows, inflection point. In McKenzie's retail Channel.
Which I know Luke will be happy to speak to shortly.
But first, I'll turn it over to Damon to speak to the wealth management. Segment operating results, including the continued strong momentum at IG wealth.
Thank you, James, and good morning. Everyone. Turn this light 15 and wealth management. Second quarter highlights including IG wealth, Rockefeller and well simple.
the second quarter was defined by numerous records at IG wealth and is a great example of our ability to execute our strategy and build momentum
IG wealth into the quarter. With record quarter end a of 146.7 billion up a solid 13% year-over-year and up 3.6% during the second quarter driven by financial markets and Strong net inflows.
G's Au. I'm at $129.5 million, representing a quarter and a record, and was up 13% year-over-year.
Growth inflows, gross sales into IGM products as well as growth inflows from new clients, all set new Q2 record high.
Total growth inflows from. Newly acquired clients were 1.2 billion dollars with macro fluid and high net worth clients representing close to 80% of these loans.
Excluding a 24 million outflow related to an IG defined benefit plan, pension transfer to an SMA account at. McKenzie told them that inflows for the quarter, were 249 million and net sales in the IGM. Product was 513 million representing increase in net sales of over a billion dollars versus last year's last year in Q2.
July continued this momentum with strong growth inflows and growth sales as well as strong positive. Net inflows and sales in the IGM product.
Our mortgage and insurance business. Also delivers strong performance, which I will speak to in a later slide.
July 1st. We reached an important Milestone. As we received regulatory approval of the merger. Our mutual fund in mutual fund and investment dealers into 1. Dual registered dealer, I will touch on the operational benefits of this in a few slides.
Turn to slide 16.
You can see it is gross and net flows over numerous periods.
This slide shows the growing momentum that this business has
On the left you can see in all 3 periods. We are benefiting from both increased growth inflows as well as declining growth outflows which is a solid combination.
The graph on the right illustrates the ability of our advisors to work with their clients and navigate volatility and dollar cost average into long-term IG Solutions.
As a reminder.
During July 2024, we saw significant flows which were partially related to the now eliminated changes to Canada's capital gains rate policy.
We remain as confident as ever in our build, our advisors ability to negotiate the complex Market environment with our clients so that they can build preserve quantify and distribute their wealth.
Average cost from cash gic's and higher balances into the markets over time.
Turn this slide 18.
And our growth inflows from newly acquired clients which continues to be dominated by new massive fluid and high net worth clients.
Year to date. 78% of our growth flows from newly. Acquired clients are their magic floor and a high net worth
and high net worth clients. Specifically represent 38% of these gross inflows which exceeds our investor day commitment of 303%
Turn the slide, 19.
You can see the Continuum momentum in our mortgage and insurance businesses both which have delivered strong year-over-year growth.
Of importance in our insurance business. We are seeing different advisors leading Insurance production than we did last year, reflecting our increased breadth and focus across this business.
This is in line with similar trends that we are seeing in the mortgage business, which we spoke to last quarter,
Earnest like 20. I wanted to provide a quick update on our segmented model with the focus on how it's driving productivity enabling growth in our business.
in the middle of the slide, you can see growth in each Channel, including the corporate Channel, which now represents approximately 10 billion dollars of AUA and 34% of our clients,
The corporate channel has extended our entrepreneurial advisors ability to focus on financial planning with their core clients.
On the right hand side, you can see the benefits of this because it's supported, our increased mortgage and insurance, penetration, and greater success in acquiring Master fluid and high. Net worth clients.
Turn this slide 21.
The merger of our legacy dealers into one dual-registered dealer.
Moving to one dealer supports our future growth and streamlines our processes to drive operational efficiency.
This new model, simplifies the client experience. Streamline streamlined, our business operations and makes it easier for our advisor to focus on building their business regard, regardless of their license.
Now, turn this like 22. Let me provide some updates on rockefeller's programs.
Client assets were up 22% year-over-year supported by markets inorganic and organic growth.
Over the last 12 months, organic growth drove 5.9 billion dollars in client assets driven by rockefeller's core wealth platform.
Walker fellow also continues to add to their private advisor network with 15, new advisors being added during the second quarter.
Turn your slide 23.
Well, simples momentum continues driven by their ability to attract new clients and grow client. Share of wallet. While simple has increased their client served by 13% year-over-year. While the AUA has increased by 11.5 billion dollars during the quarter and is up 94% year-over-year.
With that, I'll turn it over to Luke Google.
Thank you, Damon and good morning everyone.
Trying to page 25. You'll see a few highlights for McKenzie and for us at management for the quarter. We ended the quarter with record high AUM of $200.24 billion, up 11% from last year and 3% in the quarter. We had another 1.5% growth in July.
On the left, we had an investment fund that sales of 187 million in the quarter. This is our best Q2 results since 2021 and a $900 million improvement from last year driven by meaningful improvements in retail.
Overall, we had net redemptions of 135 million.
Previously announced Awards in our institutional business funded during July and we had institutional net sales of over 700 million come in just following the quarter end.
In the top, right? We've highlighted the meaningful momentum that we experienced in retail during Q2 which is continued into the third quarter.
and as James noted July was the third consecutive month of positive retail investment fund, net sales with significant year-over-year improvements
as reported yesterday, overall net sales in a month, including institutional awards were 910 million
We also watched 9 new investment funds in the quarter focused on areas of emerging growth and shelf completion.
This supplements 15 launches during 2024, which have held Drive our recent success in their retail.
Q2 launches include expansion of our successful hosting Quant offering with 4, new Quant, mandates including Canadian balance, Canadian Equity Global balance and our long short US Health extension strategy
We've added to our fixed income offering during the quarter with Target date, fixed income ETFs, as well as a triple a CO ETF that brings proven capabilities. We have in this space to retail and has a compelling yield that is currently over 6%.
We have also augmented our fundamentals of equity product offering with an international Equity Fund that brings our Asian and European teams to Canadian retail.
We've also launched, the putins flagship us value mandate here in Canada. This successful mandate, has amassed over 50 billion dollars in the United States.
Continue to generate good growth in the quarter. China sees, investment funds are up 344% from last year, due to Strong, net sales and market, share gains. While Northland continued to have strong fundraising of 1.7 billion in the quarter and 5.2 billion in the last year.
Turning Page 26. You can see the trend in history of McKenzie's investment fund, net sales.
As mentioned on the left, you can see that this is our best second quarter investment fund at sales since 2021, and this represented 900 million of improvement driven by those meaningful improvements in retail, which were net. Pause has been made, June and July.
Also, on the left, you can see that a noticeable part of our net sales were into our ETFs.
Our top selling ETF was our International Equity ETF managed by our Quant team.
This is an actively managed product and our pricing is agnostic between the mutual fund and ETF structures.
I'd also note that we don't disclose gross sales on ETFs due to data, tone challenges, but we estimate that overall investment fund growth, purchase activity was up 20% in Q2, 255 relative to q224,
on the right, you can see the last 12 months Trail in that sales overall, and for retail,
I had a question last quarter on whether our Outlook is for positive. Net sales for investment funds in 2025, you can see that we are now there as we close out July, and net sales are increasingly driven by acceleration and Retail.
Page 27 at the top, right? You can see our net sales segmented between retail and institutional and by delivery vehicle.
The team circled, the Improvement in retail year-over-year and this is largely been driven by the full service brokerage Channel with meaningful, net sales into active Equity ETFs there.
Also noteworthy was declined to Redemption rates across our Shelf during the quarter.
As touched on already, our institutional SMA, net sales in Q2 was impacted by the timing of the funding of 1 of our previous announced Awards. And this came in in early July and was 600 million dollars.
At the bottom left, you can see our last 12-month trailing sales rates, where you can see we're nicely closing the gap to the industry.
And in the bottom right? We experienced a number of morning star rating, improvements to 4 and 5 Star, during the quarter including our Quant Global Equity Fund being increased to 5-star and our green chip environmental Flagship fund upgraded back to 4-star on the strength of very strong performance over the last year.
Turn to page 28. You can see our performance in net sales for our retail mutual funds and ETFs by Boutique.
in the bottom half of the slide you'll see that noticeable Improvement in flows occurred across a number of boutiques, including Ivy resources, Global quantity of equity Global Equity, Global equity, and income and
Fixed income.
I'd also highlight, we have compelling investment performance, relative to peers across many of our critiques.
At page 29. We thought it was important to provide another update on our Global quantity of equity Boutique following the last update a few quarters ago.
I had 1 remind everybody that gqe has a holistic Quant approach that seeks to be all whether across Market environments.
This team has continued to deliver exceptional performance. Through the recent volatility of the broader roster of offerings and continues to experience strong business growth. As you can see in the middle,
In the top, right?
We have been very focused on trailblazing and Quant in the Canadian retail space.
And with our Q2 product launches, we now have 13 different mandates offered in Retail across the mutual fund and ETF delivery vehicles.
Net sales are strong growing, and not, yet near the our potential.
We had over 500 million in net sales in Q2 and 850 million Year date.
I'd also known the bottom, right. As previously announced, we had 4.3 billion in Partnership and institutional awards that have all now funded, and I'm pleased to announce today that we have another 1 billion dollars in Awards across 3 clients that's going to fund over the coming months.
Importantly, we're pleased with the diversity of these clients by type and geography and the clientele includes some of the largest public pensions in the world.
We have a strong Pipeline and as we moved into the back half of 2025, I look forward to updating you on future progress.
Turn to page 30 for a few comments on the Chinese investment fund industry.
On the left hand side, you can see that the industry grew by 7% in the quarter driven by strong debt. Inflows of 1.8 trillion 1 split roughly equally between money market and long-term funds.
On the right, we're pleased with the continued strong performance of TRMC, which has continued to post market share gains on long-term funds, increasing to 6.4% of the market, up from 6.2% last quarter and 5.4% last year.
1 or 30 billion Canadian in net sales during the second quarter.
And on page 32, you can see another quarter of strong growth at North leaf with 1.7 billion in fundraising in the quarter and 5.2 billion dollar loss to a month.
Some of the particular strength of this quarter related to a very successful loading as the team concluded, its fundraising effort around their infrastructure fund and P4.
I'd also note that we're pleased with the strength of non-canadian. Investor investors which with around half of the fundraising over the last year, relating to foreign investors as northleaf continues to expand its clientele globally.
I'll now turn the call over to Keith Slaughter.
Thank you, Luke and good morning. Everyone on slide 34 you can see key highlights for Q2 adjusted EPS which excludes life Go's. Other items was 1.7 cents up 15% year-over-year and a record Q2 High. A strong results were Diversified and driven by both our core businesses and contributions from our strategic Investments.
We've returned 168 million dollars to shareholders in the quarter including 35 million, in share repurchases. We have a repurchase 2.6 million shares year to date and as James mentioned we are determined to repurchase more shares and are on track toward. We have 5 million shares for 2025.
As we continue to return Capital to shareholders, we are also strengthening our financial profile by steadily lowering leverage and cash debit ratio. While maintaining Financial flexibility with significant unallocated capital.
And finally, as James has already spoken to, we increase the fair value of wealth simple to approximately 1.5 billion and realize value from our 2020 investment in Conquest through a partial investment with gross proceeds of 25 million.
Turning to slide 35, you can see our AUM flows on a year-to-year basis. Ending assets are up 12%.
Uh while ending assets, we're up 3.2% uh, versus q1 the significant volatility. During April caused average assets to decrease slightly versus the prior quarter. On the left hand side, you can see the volatility in our auma in the quarter and it's worth noting that at the end of July ending, Au auma is up approximately 5% from the Q2 average,
If markets remain stable, the increase in assets will be a driver of strong Revenue growth for Q3.
Turning to slide 36.
0.1 and point and 2 help to illustrate the Diversified drivers of our 15% year-over-year growth in adjusted EPS on point 3 on a year-to-date basis. Our combined operations and support and Business Development expenses are up approximately 4% from last year and we are maintaining guidance of 4% for the full year.
On slide 37. We present the key profitability drivers for IG wealth management and I'll highlight a few points.
On the left side, you can see the average. A was down slightly due to the volatility experienced in April. On the right, as a reminder, the advisory fee rate includes advisory fees charged on AO and also includes interest earned on client cash on deposit during the quarter. Our advisory fee rate was up 1 basis point, and this is driven by a change in tiering interest that is paid on client cash based on the amount on deposit.
As I mentioned at the end of July, our a is up approximately 5% from the Q2 average. And assuming markets, hold, we do expect to have an approximate 1 basis point impact on the advisory fee rate in the third quarter as client.
Move up wealth fans and for contacts this type of strong client return and impact our moral alignment with what you'd expect over 1 year versus a quarter.
On Flight 38, IGM's overall earnings of $131.5 million in Q2 are up 17.7% year-over-year. I've already spoken to 0.1 on Point 2. Other financial planning revenue continues to be supported by strong insurance performance, which Damon provided some detail on, and new fundings in our mortgage business are growing. We are now starting to see signs of growth in the mortgage book, which we expect to continue over the midterm. For Q3, we expect more mortgage income to be between $6 million and $7 million, excluding fair value adjustments.
On point 3.
IG operations is important business development. Expenses were 164 million versus our guidance from last quarter of 170 million driven, primarily by timing related, to spend on technology initiatives and we are maintaining our guidance for expense growth of not more than 2 and a half percent for the full year.
On the right overall third-party rate, excluding Canada, Life and decreased primarily due to the onboarding of 3.7 billion in institutional assets as we guided during the q1 call. And as we look forward to Q3 with the additional 600 million institutional assets on boarding in July and continued success of our wealth management Partnerships. We expect to see this rate. Um, come down about 0.5 basis points in Q3, which is in line. With the guidance, we also provided in q1,
To turn in this slide 40, McKenzie earnings were 57.8 million up, 3.4% year-over-year and on 0.2 operations and support and Business Development. Expense growth was 118 million and relatively in line with our guidance of 120 million,
Slide 41 as China, MC results. First on the left, we saw another strong quarter in AUM growth and on the right. You can see Chinese MC's earnings of 29.7 million with slightly below, q1, 2025, and adjusting, for currency, Q2 earnings would have been in line with q1
Slide 42 has earnings contributions from companies in each segment, a couple of comments on the Strategic Investments. First Rockefeller earnings, were close to break. Even this quarter and meaningful improvement from last quarter. And as stated on the q1 call, we do expect earnings to turn positive in the second half of the year.
North Leafs, second quarter, earnings were up, 76% from 2024.
And 7.4 million after non-controlling interest driven by higher revenue, and expense management.
I would note that North Leaf has delivered very well. During the first half of the year, including strong incentive fees during Q1 and solid revenue growth and expense management through the second quarter. Uh, during the second half of the year, we would expect a base level of earnings closer to $5 million per quarter on average in advance of NCI, with a line of sight to upside driven by the final closing of a committed capital fund where clients that commit to the fund, after the initial investment, pay a catch-up fee, uh, sometime in the next couple of quarters.
A few points on slide 43. First, you can see the revised fair value of approximately $1.5 billion, up from $1.2 billion last quarter.
The change, considers the increase in public market. Period valuations in the quarter wealth, simple, as business performance, that has seen a grow by over 20 billion dollars a year to date driving a revised Revenue expectations, as well as third-party. Secondary transactions, that occurred at the end of the fourth quarter.
On North Leaf, we increase the carrying value by $0 million, net of NCI, for the earnout, which reflects the very strong fundraising quarter. And finally, at the bottom of the slide, you can see that our Strategic investment
unallocated Capital. Now, have an indicative value of 6.6 billion dollars, which represents a 28% value.
Line, 44, demonstrates execution against our Capital, allocation priorities. We continue to return Capital to shareholders and strengthen our financial flexibility.
In addition to paying the quarterly dividend and repurchasing shares, we continue to reduce leverage, now just under 1.5 times, and decrease our cash given and payout ratio, now at 62%, down from 64% last quarter. At the end of the quarter, our unallocated capital remained above $600 million. That concludes my remarks, and I'll turn it over for questions.
Thank you. We'll now begin the question and answer session to join the question queue. You may press star then 1 on your telephone keypad. If you're using a speaker-phone, please pick up your handset before pressing any keys to withdraw. Your question press star then to
Our first question is from Tom McKinnon with BMO Capital. Please go ahead.
Yeah, thanks very much. Uh, good morning just uh, more of a strategic question with respect to China AMC. I think it's your investor day. A few years ago, you talked about 15% growth in the Strategic Investments, uh, and I think part of China AMC you were looking for assets, to kind of grow in the 13th to 15% range. Now we've seen much better growth in China, AMC assets but, uh, your share of the China AMC earnings. Uh, it's probably up. I don't know. Mid to high single digits over the last couple of years. Even if we adjust for the, uh, the change in ownership, um,
With respect to IGM. Are there any other synergies you get from it? Thanks.
Sure. Well, good morning Tom. It's it's James speaking.
uh, you know, when I compare and contrast
you know, the external environment that China AMC is operating in
to the actual performance of the business.
um, all that that company has done for us is
Frankly, surprised to the upside.
uh, the business performance has been excellent having
As you know, we navigated significant equity market declines a couple of years ago.
Uh, a meaningful reduction in active uh Equity fees.
And an even bigger reduction in passive ETF fees.
So, you know, as we came into this year, we we said that they're going to
They're going to earn through all of that. We're expecting 2025 earnings to be flat to 2024.
I think they may do better, which
Again, all things considered, you know, in particular things that have occurred in the external environment.
I think it's a pretty remarkable performance.
So, you know, as we look into 2026 and Beyond
Uh, we're now expecting having come through this period that I think they've navigated particularly well.
Uh, we're now expecting a return to growth.
And, uh, you know, that'll be driven by a lot of the kind of the the, the the, the the system, the macro factors the retirement, reforms.
The amount of property markets and into financial markets.
Um,
you know, we're now expecting that growth to resume in 2026 and a number of us, a significant number of us.
Uh will be over in Beijing in September and uh at those meetings we uh this is the conversation that we're going to have and we do expect to confirm a return uh to growth for for for China AMC. Um Luke do you want to add some comments? Yeah, yeah. Thanks. James morning Tom.
Yes, I just did want to reinforce James's comments the, um, the structural changes put forward in that industry in the last 24 months to reduce fees on active every imbalance funds as well as ETFs. But we're really designed to make sure this industry is realizing its full potential. And we're very supportive of the change of the been made in the in the Chinese investment fund industry. And uh and and were as as optimistic as ever that they are indeed going to continue to see uh this strong growth with Chinese investors uh increasingly using investment funds.
Vehicle. Um, beyond that, part of your question was how we get uh, benefits outside of the direct holding? I'd highlight 2 2 that uh, that that you're clearly seeing, um, in our results. The first is, is the opening of doors for us in Asia. Um, a number of the, uh, the institutional client wins that we've announced over the prior quarters have occurred in the, in the Asian market. So, so this has been a Clear Proof point on our, on our, our investment in in China and China MC. Uh, the other thing that that is is less transparent is knowledge sharing across our businesses. This includes our investment team franchises as well as as just sharing of information and how we run our business. So so we're very pleased with this relationship and and how it's going, and the value that's being delivered for, for IGM and McKenzie.
The next question is from Bart. Zarsky with RBC, please go ahead.
Hi, good morning. Thanks for taking the question. Um, wanted to just dive into the simplification you announced where you emerge. Mutual fund investment dealers. Like, can you quantify some of the benefits? You expect you called out streamlining processes supporting future growth so any sort of numbers you can provide on those expected benefits.
Yeah. It's uh, it's Damon here. Um, you know, I'm not going to focus on on, on the numbers but I'll give you a kind of our our take as to how we see this. When you, when you have 2 dealers, you have 2 legal entities.
Um, so you have multiple filings, multiple audits, multiple General ledgers, multiple client applications and forms.
this all gets streamlined, uh, so that we can have 1 of, uh, of of each and
for us, that's extremely important. Uh, it it improves the client, India adviser experience. Uh, also along with that, you know, we can finish our brand transformation, uh, because we can retire, the investors group name, um,
Finally uh you know Investors Group Financial Services was our mutual fund dealer Investors Group Securities Inc was our Securities dealer and now we're future is IG Wealth Management Inc.
Toy for future growth with this move. And and let me share, let me share, you kind of why we feel that way. Uh, first off, it allows our advisors uh in a much more efficient and streamlined fashion to switch licenses if they so choose.
Uh and uh, every advisor has the right to to choose that and be able to to ensure that they are able to compete in their Marketplace.
uh, number 2 and we believe in the future, it's going to allow our advisors to be much more effective building high performance teams
In our view, high performance, team does mean that you should. You can have members of your team that have different licenses.
Uh, so we're potentially excited about that. The last 1 is it allows us. It's going to allow us to to be even a better recruiter out there, uh, in talking to experienced advisors in the marketplace that they want to be financial planners and and focus on competing in their in their Marketplace. So, you know, for us this was a, this was a big move.
That's helpful, thanks. And then just on, um, well, simple, maybe a two-part question. 1. Um, help us understand, you know, the key drivers of that valuation mark increase. And then, maybe more strategically, you know, we're seeing capital markets come back. The environment is pretty, pretty healthy out there. Like, any updated view in terms of monetizing those assets or leveraging further benefits in that regard? Thanks.
Yeah. Hi Bart. It's uh Keith Potter here. Yeah, in terms of the valuation for wealth simple. Um, we take under consideration a number of factors 1, you know, to the extent that there's a recent transaction, we can look to our recent transaction on the property.
Um, there was a couple of transactions at the end of 2024, so we took that into consideration.
Um, also during the the first half of the year, you can see a real rise in especially this quarter in uh fintech uh peer multiples in the marketplace. So that's another point of observation now we know private
Uh, Market firms. Don't necessarily trade like public market firms, but that's that's an important consideration. And as importantly, more importantly, we've seen well, simple, uh, business in the last uh call it uh, 2 quarters. Grow their AUM by 20 billion dollars and that results in sustained Revenue growth. So, when you think about, uh, the cash flows in the future forecasts and uh, uh, for the business, um, we look at all those 3 elements and, uh, for the, uh, for the valuation.
And Bart. I it's James. I would just have that. Um,
the second part of your question, uh, our our interest in. Well, simple is strategic. It's it's not uh Financial. Uh it's it's not a trade.
um, we have no desire to monetize, uh, our state,
Uh, I expect us to be a long-term shareholder.
And as I said in my remarks, I think, you know, the earnings were delivering here are before.
We get earning any earnings contribution from either Rockefeller or well, simple. And I think, you know an earnings contribution from Rockefeller. I think is right around the corner, uh, and in the fullness of time, uh, we'll get a, I, I think a very significant earnings contribution from well simple as well. So, it's a long-term, uh, uh, you know, driver of growth and, and, and and another source of diversification within, within IGM, Financial
Great. Thanks guys.
The next question is from Graeme riding with TV Securities. Please go ahead.
Hi, maybe we could um just touch on Luke, just on the Improvement in the retail flows.
Um, at McKenzie can you just maybe touch on what you think? The key the key drivers are there on sort of turning that uh that momentum um I guess at the margin.
Yeah, I guess it's really really 2, 2 things. Um, Graham. Thanks for the question. Uh, 1 has really been, uh, been the places in the market we've been leaning into. So, a lot of our, our strength came, uh, from International Equity globally where we have that strong offerings in Quant. Um, our Global div, which is a, is a core Global Equity, where we've seen that demand, um, our Emerging Markets fund is also by added to a number of Reckless and so it's really been executed on the basics of making sure that we're leaning in to to mandates where compelling performance and and we see strong demand in the marketplace. The other thing I I'd highlight is is just the sheer work effort of of the retail sales organization. And, uh, we we had an important event in, in London, England in May, to showcase our northlea, private capabilities. And, and this was another moment where we're going to report more in it next quarter. But, but we've seen a lot of momentum and, and scale building in our, uh, Enterprise business. And, and this effort to build the privates for retail investors, has has helped us get in front of people that we didn't touch but
Story, and that's building improved momentum as well.
Um, okay, great on that North Leaf. Um, what's I think? I think your result this quarter in terms of um,
Earnings is is higher than what you've guided to for the, for the second half of the year. So, what's, what's driving either? The, the stronger earnings this quarter or the
Or the outlook for contraction in the second half.
I agree. It's, uh, Keith Potter here. Yeah, the, um, earnings were were quite strong, uh, this quarter, um, Revenue growth has has, uh, moved upwards. We expect that to continue, uh, it was a very disciplined quarter for expense management at Northeast. So that was 1 of the, um, areas that, uh, even beat our expectation. Um, and that's why, you know, guiding to something closer to to 5 million dollars for the next, um, as a base for the next couple of quarters is, uh, uh, is what I I commented on, but like I said, there's, uh, is upside potential. Uh, there's an expected close of a committed Capital fund, where there is, uh, we do expect a catch up fees.
Uh, that could occur in Q3 or Q4, um, but, uh, that would be the main driver for this quarter, uh, strong expense management.
Okay, understood then. Just lastly, can you remind us what your um, sort of threshold is for considering, uh, a dividend increase and you know, with your excess Capital, it sounds like
um BuyBacks um and reducing leverage are sort of your your primary focus. Is that correct?
so we've long it's James, we've long said that as we as we approach 60% pay over ratio on a
cash basis.
Uh, you know, we'll take a conversation to our board, uh, as to whether it's time to increase the dividend.
And so, we're making, I think, pretty good progress in that regard. So, that conversation is not far away.
um but you know, our our current thinking is is is kind of unchanged, uh, you know, to to to recent conversations, we've had with with you folks,
um,
We just think we can add more value to our shareholders, by buying back stocks and by increasing the dividend.
we we have an attractive yield even today, it's about a 5% yield, but
We look at what we've built. We've looked, we look at the quality of the 6. Businesses we're invested in. And and and you know, we believe as I said, our Shares are undervalued and that's where, um,
That's where we should be committing capital.
And so, you know, when you look at the free cash flow generation of this business, when you look at the unallocated Capital position of 600 million plus
And you look at our leverage ratio, which is now, you know, 1.49, just under 1.5.
I think there's lots of opportunity for us to um, approach 2026.
With a goal of buying back you know meaningfully more shares than I expect will buy back this year. And as Keith said this year we're targeting 5 million.
Yeah, that's helpful. Thank you.
Once again, if you have a question, please press star then 1.
The next question is from Jane Goin with National Bank Financial. Please go ahead.
Yeah. Thanks. Um, the first question for, uh, for Keith, just wanted to get a, a little bit more clarity on the advisory fees at, uh, at IG wealth. And and the the moving Parts quarter to quarter here at, uh, it sounds like, uh, there's going to be an impact but uh,
It wasn't quite clear if it was moving up or down longer term or if it was going to stabilize around these levels with some of the AUM coming in. So maybe just to run through that again for me.
Yeah, sure. Uh, Thanks James. Yeah. Just in terms of the uh The Advisory fee and the changes quarter uh to our to our interests, you can kind of think about the 1 basis point being, you know, kind of a permanent increase of a basis. Point going forward, the comment on uh where that rate is going, uh, in the future. It really is going to be driven or or my comment was
With the strength of moving toward High, net worth Mass affluent markets, given the strength of what we've seen in market returns, you know, that could be up to a basis point next quarter. Um, so I'd separate kind of the the uh, client interests uh, comment where I think that's a permanent increase and then. Um, but the, the, the the overall rate will vary uh, based on our clients moving up, wealth tears, as it relates to our focus on high, net worth and mass affluent.
Yeah. Okay. That's uh that's more clear. Thank you. Um thank you thinking about uh Rockefeller uh the guidance now is that it should deliver positive. Uh
Income in the second half. Um, my my question I I understand that my question is maybe more around
You know the trajectory of rockefeller's income is this uh, you know, should we expect positive results? Uh, consistently quarter to quarter going into 2026 and then, you know, the guidance before was that it would replace IPC. Uh, earnings. It doesn't seem like it's on track to do that in 2026. So maybe if you could just help us
think through the, you know, some of the data points to, to focus in on for Rockefeller where that revenue or income can
Can't get to in 2026.
Yeah James Keith again here. So you know if you look at last quarter um earnings of -4.4 million you know, now -7 million, this quarter, um, you know, a strong quarter of asset growth. Like we would see, you know, trajectory into the third and fourth quarter of continued progress, uh, to that uh positive earnings. And so we had in the 2026. Um, we do believe that it, you know, it's it's growing at a pace that that uh couldn't would replace ipc's earnings. Um I talked about that last quarter. Um we're you know, call it about you know a year delayed but we would see 2026 is that that moment of opportunity
Yeah, and I, I Jane, it's James. When you peel apart their business, you know, the heart and soul of that business is what's called our GFO, the Brock Propellers, the Global Family Office business.
And that business is performing very well. It's strong overall, it's it's as was promised.
Uh, I would say.
Uh, they also have a strategic advisory business in m&a, business, if you will and, and and, and, and, and that's being softer consistent, I think with every m&a, business on the planet, that, that I'm aware of. And finally, they have an asset management business that, you know, has is, is, is, is, is doing reasonably well? Uh, but perhaps, you know, not, uh, not not, not the growth isn't quite as robust as we might originally have a
Expected. So, you know the the sum of all of that is it it will take a little bit longer but I do want to I do want to highlight that you know Rockefeller has meaningfully increased meaningfully increased their recruiting targets for 2025 versus 2024. They are more confident than ever.
That, you know, that combination of a very successful business platform that they have, you know, and an iconic brand.
Great management team that that's going to continue to make them kind of the destination of choice for wirehouse advisors who are who are looking for a new home. So, you know, the heart and soul of that business is uh, is is is just going real real well.
Okay, great. And then, um, you know, last question, um, obviously, uh, you know, a good chunk of unallocated Capitol today. It does sound like BuyBacks, uh, are still a very important Focus for Capital allocation, um, but thinking through the, the Rockefeller State, um, and other opportunities. Uh, with the also with leverage, um, you know, fairly low as well is is you know, Rockefeller the most likely, you know, strategy are there like maybe talk through some of the like is it an active more active market today than, uh, than over the last few quarters for for potential Acquisitions? Um, you know, what else might you be looking for?
Yeah, you know, we said it, we said in December of 2023 that, uh, that we were at our investor day that we were entering a 2 year period uh where the focus would not be m&a instead, the focus would be investing in the core investing in IG investing in McKenzie and that's very much what we've done.
And so that 2 year period will end. I suppose at at the end of this year,
Um so I suppose the door opens. Um, and what, what I would, what I would say to that is um I just want to reemphasize, we have the businesses we want.
3 Asset Management business.
Proud of the businesses and we're not looking.
To add to the current kind of portfolio. So em and any m&a we do, uh, you should expect it to be restricted to the uh to the 2 to the current portfolio. I'd also add you know as again as we kind of close out on this 2 year period, we're thinking we are thinking about, you know, what are the criteria for any further, Capital deployment?
And the 2 criteria that we're very focused on are that any further deployment of capital within the current portfolio? The the deal needs to be 2 things.
1 is risk, smart. We talked about that in the original, Rockefeller deal,
So, the first is risk, smart. The second is, it has to be value creating clearly value, creating for itm shareholders. So those are the, the, the, the 2. Um, you know, the the kind of the 2 criteria, I look across the portfolio and, and I, I can see a world where, you know, it's we like, we know we will be putting more Capital into North Lake.
Okay, because we have uh, obligations happily uh to to to purchase uh more equity in in North Leaf, which we're pleased and proud to do. But I also want to point out that as we do that. I'm also pleased to say that the founders and the employees of North Leaf are going to remain through at least through the medium term.
Shareholders in that business owning the exact same instrument as us. Uh, common shares.
And then I looked over to Wells simple and Rockefeller. And I, you know, and I and I, I, I, I do see a world where possibly, uh, we could put, uh, some more Capital into into 1 or both of those but I do, I do want to emphasize that the 2 criteria for any further Capital deployment. Particularly when we're in a world where our stock is trading, where it is, the 2 criteria, are the deployment of capital has to be both risk, smart and value created.
That's a great caller. Thanks James.
This concludes the question-and-answer session. I'd like to turn the conference back over to Kyle Martin for any closing remarks.
And uh, yeah, once again, we'd like to thank everyone for joining the call with us this morning and dealing with that. We can we can end the call.
Thank you. This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.