Sign in Subscribe
Banks (Finance)

AGF Management Ltd. Takes Aim at Financial Institutions with No-Load Pricing Option

Strategic Insights

— 2 min read

AGF Management Ltd., the fifth-largest independent fund distributor in Canada, is introducing a no-load pricing option on its family of 16 funds, a move that takes direct aim at financial institutions, particularly big banks. The company's president, John Meyers, notes that the banks have been the fastest-growing group in the industry, and AGF is seeking to capitalize on this trend. The restructuring plan includes the introduction of three sales charge options: series A with a front-end sales charge, series B with a redemption fee, and series C with no-load pricing.

Key Takeaways:

  • AGF Management Ltd. is introducing a no-load pricing option on its 16 funds, subject to shareholder approval effective Oct. 1, except for AGF Canadian Resources Fund, which will be delayed to Jan. 1.
  • The company will offer three sales charge options: series A with a front-end sales charge, series B with a redemption fee, and series C with no-load pricing.
  • AGF has phasing out the 0.5-per-cent direct distribution fee on funds sold with a redemption fee and adding this charge to the management fee.
  • The company launched the no-load option on two new funds in the spring, and it has accounted for about 17 per cent of sales revenue for those funds.
  • AGF considers the 20 per cent no-load sales experience in the U.S. market "significant enough" to offer this option more broadly.
  • The company is proposing to amalgamate all its foreign equity funds into a new mutual fund company, AGF International Group, to allow investors to diversify their portfolios and switch between funds without undue tax consequences.
  • Shareholders in any AGF International equity fund will be able to convert to any other member of AGF International for a negotiable fee of up to 2 per cent.

Statistics:

  • AGF Management Ltd. has 16 funds that will be affected by the no-load pricing option.
  • The banks have been the fastest-growing group in the industry, according to John Meyers.
  • The no-load option accounts for about 17 per cent of sales revenue for the two funds launched in the spring.
  • The company considers the 20 per cent no-load sales experience in the U.S. market "significant enough" to offer this option more broadly.
  • AGF proposes to amalgamate all its foreign equity funds into a new mutual fund company, AGF International Group.
  • Shareholders will be able to convert to any other member of AGF International for a negotiable fee of up to 2 per cent.

Sources:

  • "AGF is taking dead aim at financial institutions, particularly the big banks, in offering a no-load pricing option on its family of 16 funds, says president John Meyers." (The Globe and Mail)
  • "The banks, which offer no-load funds, 'have been the fastest growing group' in the industry, Mr. Meyers said." (The Globe and Mail)
  • "AGF is the first group to expand the no-load structure across the full line," Mr. Meyers said. (The Globe and Mail)
  • John Boeckh, AGF's vice-president of marketing, said the no-load option is unlikely to generate a huge percentage of AGF's sales. (The Globe and Mail)
  • "While the U.S. experience is closer to 20 per cent, 'we consider this finding significant enough to offer this option more broadly.' (The Globe and Mail)
  • Under the restructuring, AGF is phasing out the 0.5-per-cent direct distribution fee on funds sold with a redemption fee and adding this charge to the management fee. (The Globe and Mail)
  • "We want to make sure our assets continue to grow and keep profitability up," Mr. Meyers said. (The Globe and Mail)
  • In an additional move, AGF is proposing to amalgamate all of its foreign equity funds into one new mutual fund company, to be called AGF International Group. (The Globe and Mail)
  • Shareholders in any AGF International equity fund will be able to convert to any other member of AGF International for a negotiable fee of up to 2 per cent. (The Globe and Mail)

Read more