Changes at AGF

Blake Goldring notes that his departure as CEO follows a string of changes at the company, including: transformation into a global asset-management firm from a retail mutual fund company; and significant executive appointments, including McCreadie, who joined AGF in 2014, as well as new heads of retail sales, human resources and marketing.

“The only thing that hadn’t changed was me,” Goldring says.

Despite all the changes, the Goldring family remains involved in the company, which was co-founded by Warren Goldring (Blake’s and Judy’s father) and Allan Manford in 1957. Still, next month’s changes mark a significant shift: for the first time in the company’s history, a Goldring is not CEO. Yet, both Blake Goldring and McCreadie believe this is further proof of AGF’s commitment to change.

“It’s a very healthy and a very positive sign to the Street that we believe in renewal,” says Goldring.

Dan Hallett, vice president and principal of Oakville, Ont.-based HighView Financial Group, says the announcement is a “natural evolution” for the firm. Adds Hallett: “There’s always the time when leadership change makes sense.”

The announcement also was hailed in an analyst note by John Aiken, vice president, global research, with Toronto-based Barclays Capital Canada Inc.: “Given the strong replacement and Mr. Goldring’s ongoing involvement in AGF, we do not anticipate any material changes in the business or strategy and view the change as a positive.”

But while the leadership announcement seems to be one more in a string of big changes at the firm, McCreadie intends to stay the course, for the most part, as the new head of AGF.

“[My new appointment] is just a tremendous opportunity to continue that legacy [of a 61-year-old company] over the next set of years,” says McCreadie, “but, really, [I will] just be executing on the heavy lifting that’s been done the past five to seven years.”

That plan has been building out what now are AGF’s four lines of business: institutional, alternatives, high-net worth (a.k.a. private client) and retail investment funds. Goldring and McCreadie anticipate all divisions will continue to grow and provide diversification for the company, no matter the market or regulatory conditions.

The retail investment funds business, which makes up 50% of AGF’s total business, has experienced a turnaround recently in both sales and performance.

For example, AGF reported net positive sales of $23 million and assets under management (AUM) of $38.8 billion in the third quarter (Q3) of 2018, ended Aug. 31. Although these figures are a far cry from the $2.4 billion in net sales and $53.7 billion in AUM AGF reported in 2007 – the year before the global financial crisis – they’re an improvement over recent years, in which AGF faced net redemptions.

AGF’s performance also has improved under McCreadie’s watch. As of November 2017, 54% of AGF’s retail AUM performed above the median during a one-year period, while 62% performed above the median during a three-year period. In comparison, in 2014, only 34% of retail AUM performed above the median during the one-year period and 25% did so during the three-year period.

McCreadie intends to maintain AGF’s performance goals of 50% above the median for one-year and 60% for three-year periods.

Also part of AGF’s plans for its retail investment funds business is the introduction of “liquid alt” funds, which will be permitted as a result of regulatory amendments, set to come into effect in January 2019, that will allow mutual funds to employ alternative investment strategies, such as short-selling.

“[We believe that] a natural extension for advisors [is] to have products that look like what we can provide to our large institutional clients,” McCreadie says. “We fully intend to participate [in the new class of funds] – probably in a limited way at first, but we’ll see what the uptake is.”

One area in which AGF anticipates significant uptake is ETFs. AGF first launched a suite of actively managed ETFs in both Canada and the U.S. in 2017. Today, the company’s ETFs division, AGFiQ Asset Management, offers 10 ETFs and had $733 million in AUM as of Sept. 30. Goldring and McCreadie both anticipate this segment of the business will grow significantly, to $5 billion in AUM, within five years.

As for AGF’s other business lines, McCreadie and Goldring also are optimistic. The institutional business, which had $12.8 billion in AUM as of Aug. 31, is expected to continue to grow, while the alternatives-focused division is expected to hit $5 billion in AUM in five years, up from the $1 billion in AUM AGF reported in Q3.

Meanwhile, AGF’s private-client division, which had $5.7 billion in AUM as of Q3, is expected to garner returns in the high single-digits within five years. Both Goldring and McCreadie believe AGF has a competitive advantage in this space because of the firm’s network of investment teams located around the world.

“[As a client], you tap into an organization that makes a virtue of the fact we communicate, we share information with all of our teams,” Goldring says, “which is powerful if you’re trying to [bring] a ‘value-add’ to a client.”