AGF Management Limited

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00:36 Thank you, operator, and good morning, everyone. I am Adrian Basaraba, Senior Vice President and Chief Financial Officer of AGF Management Limited.

Today, we will be discussing the financial results for the third quarter fiscal twenty twenty one. 00:49 Slides supporting today’s call and webcast can be found in the Investor Relations section of agf.com.

Also speaking on the call today will be Kevin McCreadie, Chief Executive Officer and Chief Investment Officer. For the question-and-answer period with analysts following the presentation, Judy Goldring, President and Head of Global Distribution, will also be available to address questions.

1:11 Turning to slide four, I'll provide an agenda for today's call. And we'll discuss highlights of Q3 twenty twenty one, provide an update on the key segments of our business, review our financial results, discuss our capital and liquidity position, and finally, close by outlining our focus for the remainder of twenty twenty one.

After the prepared remarks, we'll be happy to take questions. 1:33 And with that, I'll turn the call over to Kevin.

01:39 Thank you, Adrian, and thank you everyone for joining us today. During Q3 twenty twenty one, we continued to execute against our strategy and stated goals.

I'll begin with some highlights. Our strong business momentum from the previous quarters carried into Q3.

AUM and fee-earning assets reached forty three point four billion dollar at the end of Q3, an increase of two point six billion dollar compared to the second quarter. 02:02 Our mutual fund business continued its sales momentum, reporting net sales of two zero eighty eight million dollars marking the fourth consecutive quarter of mutual fund net sales.

As a tenured leader in sustainable investing, we are proud to announce that AGF International Advisors Company Limited has been successfully named as a signatory to the UK Stewardship Code. 02:22 UK Stewardship Code twenty twenty recognized globally as a best practice benchmark in investment stewardship sets high stewardship standards for those investing money on behalf of UK, savers and pensioners and those that support them.

Diversity and inclusion have been a long standing pillar of our social responsibility commitment. 2:40 In early September, we entered a multi-year partnership to create a scholarship program with Indspire, a national indigenous organization that invests in the education of indigenous people.

This partnership is part of our multi-year plan to accelerate our diversity and inclusion initiatives. 02:58 Over the past few months, we have made significant progress in diversifying and expanding our private alternatives business.

In early July, we launched the AGF SAF Private Credit Limited Partnership and Trust. The LP targets Canadian institutional investors, while the trust offers increased liquidity that is more appealing for Canadian retail investors.

03:20 Subsequent to the launch, we refined our long term partnership with SAF. Furthermore, we strategically expanded our private alternatives business into the private equity and venture capital space by partnering with First Ascent Ventures, a firm that focuses on investing in emerging technology companies.

03:38 The strong business momentum has translated into a strong financial results for the quarter. We reported an adjusted diluted EPS of zero point two one dollars, up one hundred and sixty three percent from the zero point zero eight dollars in Q3 of twenty twenty, excluding Smith & Williamson.

03:54 We have achieved these results partly by holding core expenses flat, which we will continue to do going forward. We have been able to realize efficiencies and unlock some capacity during COVID by relying on our digital strategy and doing larger virtual meetings.

When you look at our process prior to COVID, there was a lot more travel and administration necessary in our sales process. We believe that going forward, our investment management business can grow with the existing resource base.

Having said that, incremental operating expense and capital will be required for corporate development as we accelerate the redeployment of our excess capital. 04:30 Finally, the Board confirmed a quarterly dividend of zero point zero nine dollars per share for the third quarter.

This level was increased last quarter from zero point zero eight dollars per share. 04:38 Starting on slide six, we will provide updates on our business performance.

On this slide, we breakdown our total AUM and fee-earning assets in the categories disclosed in our MD&A and show comparisons to the prior year. Mutual fund AUM increased by twenty four percent.

I'll provide more color on our mutual fund business in a moment. 05:00 Institutional, sub-advisory and ETF AUM increased by eleven percent.

We continued to receive allocations from our existing institutional clients, including one hundred million dollars into our global sustainable growth strategy during the quarter. After successfully onboarding a large institution who selected three of our global and U.S.

equity strategies on their SMA platforms in Q2. In August, we on-boarded another large institution who chose one of our global equity strategies on their SMA platform.

05:31 While AUM growth on these SMA platforms will occur gradually over time, we are optimistic based on flows for the initial few months. 05:39 Building on the success of these wins, we target entering into similar relationships with other SMA platforms in the U.S.

During the quarter, we received a redemption notice from one of our institutional clients for nine hundred million dollars. The redemption was a result of an asset allocation shift, which resulted in a large reduction of their public equity exposure overall in favor of alternatives.

This highlights the importance of alternatives and also the SMA business, which tends to be less lumpy, and will create some consistency in AUM levels. 6:12 Looking forward RFP and RFI activities have remained strong.

We continue to see interest from institutional investors in a number of our strategies, which bodes well for future sales. Our private client business continues to demonstrate consistent steady growth with AUM increasing twenty three percent year-over-year.

06:32 Our private alternatives AUM and fee-earning assets were two point two billion dollars and we maintain our goal of reaching five billion dollar in AUM and fee-earning assets by the end of twenty twenty two. 06:43 During the quarter, we refined our partnership with SAF, where we have entered into a definitive agreement along with a distribution arrangement as an alternative to AGF exercising its option to acquire management contracts of select SAF funds.

We will be the exclusive provider of their investment capabilities in the Canadian retail marketplace. This arrangement allows both firms to capitalize on the expected growth in the private credit space.

07:09 Our strategic partnership with First Ascent Ventures helps to broaden our alternatives platform into an area that gives investors an opportunity to invest in top-tier emerging technology companies. AGF committed thirty million dollar to First Ascent’s second fund and is a member of the Limited Partner Advisory Committee.

07:28 These initiatives along with our robust pipeline of opportunities in the alternative space will help AGF achieve our goal of reaching five billion dollar in AUM and fee-earning assets by the end of twenty twenty two. 07:41 Turning to slide seven.

I'll provide some on the mutual fund business. Canadian mutual fund industry continued its strong pace in the summer months, reporting net sales of thirty three billion for the three months ending August thirty one.

Excluding net flows from institutional clients invested in our mutual funds, net sales were two hundred and eighty eight million dollar compared to net redemptions of four million dollar in Q3 of last year. AGF sales improvement outpaced that of the industry.

Year-over-year, gross sales for our long term funds improved by sixty one percent compared to forty six percent for the industry. 08:18 We continue to see year-over-year improvement across all channels, IIROC, MFDA and strategic partnerships, and strong flows into multiple categories, including global and U.S.

equities, fixed income and ESG or sustainable opportunities. 08:33 The momentum in our retail mutual fund business has continued into September.

Excluding net flows from institutional clients, we have net sales of approximately eighty million dollar up to September twenty fourth. 08:45 Before I return the call back to Adrian, I want to give a quick update on performance.

AGF measures mutual fund performance by comparing gross returns before fees relative to peers within the same category with the first percentile being the best possible performance. We target an average percentile ranking versus peers of fifty percent over any one year and forty percent over the three year period.

At the end of Q3, average percentile rankings were fifty three percent over the past one year and forty nine percent over the past three years. It's important to note that one and three year performance for our top selling funds have largely remained in the top quartile.

9:22 With that, I will turn the call back over to Adrian.

09:26 Thank you, Kevin. Slide eight reflects a summary of our financial results for the third quarter with sequential quarter and year-over-year comparisons.

Excluding Smith & Williamson from our prior period results, EBITDA before commissions for the current quarter was thirty seven point five million dollars, which is nine point three million dollars higher than previous quarter and sixteen point two million dollars higher than the prior year. For ease of comparisons, we've shown EBITDA before private alternative contributions separately.

09:56 Excluding the private alternatives business, we reported EBITDA before commissions of twenty nine point two million dollars in the quarter. This is one million dollars favorable compared to Q2 twenty twenty one and nine point one million dollars favorable compared to prior year, driven by an increase in AUM.

10:12 SG&A was fifty million dollars, an increase of three million dollars from Q2 twenty twenty one and four million dollars from Q3 twenty twenty. This is driven by higher mutual fund sales and strong investment performance.

SG&A in the quarter was also impacted by increased corporate development activity and associated expenses of one point three million dollars. As we work to deploy capital, these costs may temporarily increase SG&A.

10:39 Core SG&A, which excludes variable compensation and corporate development costs, were relatively consistent with last year. EBITDA from our private alternative business was higher in the quarter.

We recorded eight point three million dollars from our private alts business and this quarter includes five point four million dollars of LP earnings, which benefited from the weakening of the Canadian dollar relative to the U.S. dollar.

11:03 This is the opposite phenomenon we saw last quarter when the U.S. dollar weakened which suppressed LP earnings.

As noted as a subsequent event in our financial statements and on our previous call, one of our long term private alternative investments managed by SAF fully monetized in June twenty twenty one. As part of the transaction, AGF recorded carried interest revenue of two point two million dollars this quarter.

11:26 And we continue to grow and diversify our private alts platform, management fee profits and earnings from our LP investments will become more consistent predictable. Diluted EPS was zero point two one dollars in the quarter, that's zero point one four dollars higher than Q2 twenty twenty one and zero point three dollars higher than last year.

11:44 Private alternatives had a strong quarter, due to the combination of increased carried interest revenue and strong earnings from LP investments. Deferred selling commissions for fourteen point one million dollars this quarter compared to seventeen point seven million dollars last quarter.

11:57 SG&A has been influenced by business performance, which continues to exceed our forecasting. Last quarter, we guided to SG&A of one hundred and eighty five to one hundred and ninety million dollars for this fiscal year.

We anticipate being the upper end of that range. We're currently in the middle of our annual strategic planning and budgeting process and as Kevin mentioned expense control is a key objective.

12:19 Turning to slide nine. I'll walk you through the yield in our business in terms of basis points.

This slide shows our revenue, operating expenses and EBITDA before commissions as a percentage of average AUM on the current quarter as well as the trailing twelve month view. Note that AUM and related results from Smith & Williamson, the private alts business, one-time items and other income are excluded.

12:41 The Q3 revenue yield is one hundred and twelve basis points, that's one basis point lower compared to the trailing twelve months. Q3 SG&A as a percentage of AUM was fifty basis points.

That's one basis point lower compared to the trailing twelve months. Resulted in EBITDA yield of twenty seven basis points, which is flat to the trailing twelve months.

13:05 Let's turn to slide ten. I'll discuss free cash flow and capital uses.

This slide represents the last five quarters of consolidated free cash flow on a trailing twelve month basis as shown by the orange bars on the chart. The black line represents the percentage of free cash flow that was paid out as a dividend.

13:23 Our trailing twelve month free cash flow was fifty two million dollars and our dividend payout ratio was forty five percent. Our cash balance at the end of August was seventy two million dollars.

We have one hundred and seventy three million dollars in short and long term investments and no debt. 13:37 We also have a credit facility available to provide credit to maximum of one hundred and fifty million dollars.

So while we currently have no debt, we're comfortable increasing our net debt to EBITDA up to one point five times should the right opportunity arise. 13:53 Our remaining capital commitment to the private alternative business is seventy seven million dollars, which is two six million higher compared to Q2.

The increase reflects the thirty million dollars cornerstone investment to First Ascent’s second fund, which was announced in August. Not included in this quarter, as our anticipated U.S.

fifty million dollar commitment to an upcoming third fund managed by Instar. 14:17 Capital commitments may be funded from excess free cash flow.

But keep in mind, there will also be further recycling of capital as monetizations occur, which will help to fund future commitments. Taking all that into account, we currently have excess capital available.

Our future capital allocation will be balanced and include returning capital to shareholders and investing in areas of growth. Those growth areas include investing in our private alternatives business as well as opportunities outside of private alternatives that are strategically in line with our priorities.

Redeploying our excess capital to generate recurring earnings is a key strategic priority. 14:55 Over the past few months, we’ve made significant progress to begin to deploying our capital and have generated a robust pipeline of corporate development opportunities.

Executing on this priority will be a catalyst for EBITDA growth and value creation. Last quarter, in recognition of our strong results, robust financial position and the confidence in our business AGF’s Board of Directors increased the quarterly dividend by twelve point five percent.

This is just one example of how we are directly returning capital to our shareholders. 15:25 So turning to slide eleven.

I'll turn it over to Kevin to wrap up today's call.

15:29 Thanks, Adrian. Q3 was a solid quarter.

Our AUM and fee-earning assets continue to climb. We recorded another quarter of positive mutual fund net flows, marking the fourth consecutive quarter of net sales.

We continue to deploy our capital and invest in key growth areas such as the private alternative business. We launched the new AGF SAF Private Credit products in July, and find our partnership with SAF and partnering with First Ascent Ventures.

15:53 Our strong business momentum translated into strong financial results. Excluding Smith & Williams from the prior period results EBITDA before commissions was thirty seven point five million dollars or seventy six percent higher than Q3 of last year.

Our margin also expanded by eight hundred and sixty basis points year-over-year. Adjusted EPS for the quarter was zero point two one dollars, one hundred and sixty three percent higher than last year excluding Smith & Williamson.

16:19 We are focused on building on the momentum from the past few quarters and creating value for our shareholders over the long term. In the past twelve months, we have returned almost seventy million dollars to our shareholders through share buyback and increased the dividend payments, which started last quarter.

16:35 We will continue to strategically invest and accelerate the deployment of our capital to key growth areas, creating value for shareholders. Along those lines, I'd like to reiterate our strategic priorities which are to deliver consistent and repeatable investment performance, drive the organization to sustainable net inflows, redeploy our excess capital to generate recurring earnings and position the firm to reach five billion dollars alternative assets by twenty twenty two, while we continue to be diligent in controlling costs to ensure increased revenue translates to expanded profits and margins to take advantage of the operating leverage in our business.

17:13 I want to thank everyone on the AGF team for all of their hard work, and we will now take your questions.

17:54 Thanks. Good morning.

In your MD&A there were several mentions of this capital deployment plan. And you also spent a couple of million on the corp debt costs.

I think both Kevin and Adrian you mentioned it in your prepared remarks. But Kevin, can you just refresh us on the key pillars of that plan?

It sounds like a lot of effort is bulking up your private alts platform. Is that where we should see growth come from in the next two to three years?

And how much would you look to deploy in that silo in particular?

18:24 Yeah. Hey, Gary.

Thanks. So a couple of thoughts on that.

Capital is always something that we try to balance out between growth during some buybacks as well as we'll continue to think now about the dividend as well. Over the last year, as we've said, I think we’ve put back sixty five million dollars to our shareholders in two of those buckets, right.

Now it’s -- with the fact that we -- a year on, we've got the S&W transaction behind us. We really are going to amp up getting the capital back to work and accelerate that.

So with that we'll come with some deal costs, which are kind of one time things debt -- and as part of that obviously, as we look at the landscape around us, the alternative space continues to get bigger and bigger. Asset allocations are continuing to grow across the spectrum from large institutions, family offices, even retail brokers.

So, we know the core public markets are going to shrink, the alternative asset areas are going to grow pretty significantly over the next decade or so. So yeah, for us, strategically, it makes sense for us to start to rapidly accelerate the deployment of that capital.

19:28 Part of that is, we’ll bring a new head of alternatives. We are in the late stages of a search process for a significant hire there.

We are down to several very good candidates there. So hopefully, we'll have somebody onboard here into the early part of next year, where we can then really ramp that up.

Soon we get that capital back to work as you all know, [the soon] (ph) we can drive those earnings through. So we're on pace to, I think, as we've said a year ago, at this time, we said it would take eighteen to twenty four months.

So I think you're now starting to see the beginnings of that. 20:00 In terms of the quantum, we have a lot of dry power, right?

If you think about current cash on the balance sheet at seventy million dollars, if you think in a world post DSC, our cash flow is probably going to ramp to north of one hundred million dollars. And then we think conservatively about relevering the company up to one point five times our EBITDA.

So you can kind of think of that over a multiyear period of about how you can get that to scale into earnings.

20:27 Perfect. Okay.

Great. And then next question, just maybe related to some of Kevin's comments there.

Just on the free cash flow, Adrian, was on the quarter twenty one million dollars I think there's some kind of one-time private alts carry or distribution in there. And then LTM is around fifty two million dollars.

But when you look at the run rate, what's the free cash flow profile look like for the company? Is that fifty million dollars sustainable and I'm looking at it, excluding the DSC benefit, it’s coming next year.

Can you maybe walk us through how you think about that?

21:04 Yes. Thanks for the question, Gary.

Yeah. I think that the fifty million dollars is sustainable based on where our AUM is today.

And I would not call the free cash flow contribution from the alternatives platform as one time. I might categorize it as lumpy.

And as we build out the platform and diversified as Kevin mentioned, what you're going to see is that the cash if you want to talk about cash, the cash we're getting from management fee profits from carry and also from treasury investments in our LPs and is going to become more consistent and sustainable.

21:42 And if you factor in the DSC, I think Kevin's comments was probably closer the one hundred. Is that where you guys are thinking there?

21:51 Yes, I mean rough math there. We spend about sixty million dollars a year in DSC now that goes away mid twenty twenty two.

There is a temporary benefit there, but for a couple of years, it's going to be in a sixty million dollar range in terms of a tailwind on our cash flow. And then as we talked about we're cognizant of the fact that, that financial benefit reverses over time.

But yeah, for the first, two or three years, it's a significant increase in our free cash flow.

22:16 And Gary, that's probably why you want to see us accelerate this a little bit, right, as we could take advantage of that in those beginning years.

22:24 Yeah, it makes sense. Right.

And then last question for me. Maybe for Judy, can you -- can we get an update on how you plan to distribute some of these private alts products to accounts outside of institutional?

So, I think it was mentioned kind of high net worth customers and whatnot. Do you need to significantly invest on the distribution side of things?

22:48 Thanks, Gary. So we are looking at the alts platform across the spectrum of offerings.

So starting really with mutual fund and real assets, ETF vehicles for liquid alternative strategies have been quite strong as well, whether it be the market neutral or long short strategies and then with our private credit offering, it is available to retail as well as family offices and institutional. And on the distribution side, whether it would be in our Canadian institutional team, our U.S.

institutional team, or across the retail channel and our team there. We have capacity and we've got the capabilities to distribute all of these products to the investors as they are demanding them and we don't anticipate significant additional expenses or head count there.

23:34 And Gary, one of the things that when we strategically thought about this, we do have that end-to-end distribution there and where others have to acquire pieces of it. So for us, I think it's natural to go the other way, which is to provide product to that spectrum.

23:50 Yeah, that makes sense. Okay.

Those are my questions. Thanks very much.

23:54 Thanks, Gary.

24:03 Hi. Good morning.

One is, on the SG&A. So I think the guidance is one hundred and eighty five million dollars to one hundred and ninety million dollars for the year.

And at the high end would imply Q4 number would have to be around forty five million dollars or just under that, which would then be kind of like three point five million dollars lower than the year-to-date quarterly average. I know you mentioned the corporate development expenses, but just wondering what's going to drive the SG&A to be meaningfully lower in Q4 to hit your guidance range.

24:35 Yes. Thanks, Geoffrey.

It's Adrian. I mean basically the short answer is that we’re three quarters of the way through the year now.

So we have a little bit of a better read on where the performance type compensation is going to land. But again, I do want to reiterate that when you look at the SG&A increase in the quarter, again, it related to corporate development, which we're going to incur these expenses to generate future incremental profits and also performance compensation.

25:07 And so the performance compensation relates to pretty impressive sales, so two point nine billion dollars in gross sales of mutual funds year-to-date versus two point two in the full year last year, so that obviously drives some expenses. And we recorded two hundred and eighty eight million dollars’ worth of net sales in mutual funds in a seasonally slow quarter.

So I just want to make sure everyone understands that some of the increases in the first three quarters really relate to the fact that we didn't anticipate the performance to be as strong as it has been for the year, but we have a pretty good read out now on where the full year twenty twenty one is going to land.

25:49 I mean that’s what I’m trying to get…

25:51 Geoff, it’s Kevin. The only thing, I’d reiterate is that, we've tried to accept it like all sales base and investment performance comp and just bonus comp based on the success, the core SG&A is around basically flat than where it was a year ago.

26:05 Right And it's just -- I mean, obviously the net sales and we see it in the numbers as you have reported, right? And the AUM has been reported.

And I'm just trying to get a sense is okay, if we see the momentum sustain itself into Q4 to still hit with all the factors in terms of performance based comp and the corporate development. Are you still comfortable that you can hit it within that range or as a result of the growth you've had and the performance you've had, it's going to come in higher, just to make sure there's a matching in terms of trying to forecast out what the margins look like first for the last quarter of the year?

26:44 Yeah, Geoff. It's Kevin again.

Yes. Well, I would say, leaning toward the high end there right, but that can get me back to where it is.

We do try to true up at each quarter. So we don't have this effect.

So clearly, if we have another blow out quarter in sales, we may have to push that a little higher. But I think you guys would look at that and say that's a pretty good short term trade off.

27:03 Remember some of these things will reset, right? The bonus numbers all start to reset as we go into a new year, targets get higher, et cetera.

So these are the -- essentially the impacts of probably too great of success on some of these metrics vis-à-vis where we have planned, right? So, but some of these will reset as we move into twenty twenty two and we haven't done that work yet.

We're just starting our planning process right now, but lean to -- for toward the high end of the range right now.

27:29 Okay. So if you have -- sorry, just to not labor the point is, if you have the same momentum through the first three quarters as you get into Q4.

Are you comfortable that you still be within the target range?

27:42 Yes. I mean, I think we've said a number of times in the prepared remarks and during the answers that we’re upper end of the range, which is one hundred and ninety.

And we're not going to – we can't give you too much transparency into some of the minutia around how we do the forecast. But at this point, that's where we’re anticipating.

So we're certainly not going to change that today.

28:10 Okay. Just on your alternatives business, can you help us understand, I guess how much of your clients invested into the various alternative strategies?

And what is that kind of mix between the different line-up in terms of institutional versus retail versus have a client at that sort of segmentation?

28:36 Yeah. Hey, I think Geoff, we want to look at that between our current, which is roughly two point two billion dollars of private alternative assets, right.

We've got a one hundred and fifty-ish in -- our money in that, again there's some other commitments that will follow on. You can think of the rest of that as third-party client money that stretches from institutions and family offices.

28:59 And we've just started on the side on the really rolling out this retail products that will be available to hire brokers. So you'll see that come on last.

So, I would say, of the two point two billion-ish, most of that is institutional family office type money across the spectrum of products.

29:14 Okay. And one last question, to your point Kevin in terms of, if alternatives is where it's at and where our clients are going, shifting capital, does it make sense to kind of an in-house specialization and in-house team as opposed to kind of partnering with some third-parties as you've kind of done so far?

29:37 Yeah. We spent a lot of time on this right, with our Alternatives Advisory Committee and the team here.

I think you guys and I’ve been – I confirm this as a PM and an analyst as -- in my DNA, right? If we went out and just started ramping up OpEx to build it out, you wouldn't see the return on that for six or seven years, right?

I think if we can partner, take majority stakes, work with folks on GP structures where we're joined together in it. That's a way to kind of rent to own it model, which I think you drive the earnings first and bring the, what I call, a knowledge equity in-house over time.

That's to us a better way to reward our shareholders to get the earnings flowing quicker, be in the space, test out some partners and think of it as a portfolio of products and managers that we’ll acquire over time. But you should think of it though that should lead you to hopefully over time, bring that expertise in-house, but not through an organic body by body expensive growth.

30:36 Okay. Thank you.

30:47 Yes. Thanks very much.

Good morning. Just on the five billion dollar private old school, I know you've been sitting at two point two billion dollars now for about a year, certainly talking as if you would be putting more capital work into this.

But if you want that goal by the -- five billion goal by the end of twenty twenty two, that's more than doubling within a year or about five quarters, I guess. So, can you give us any kind of perhaps as to how we should be thinking about this?

31:18 And then would that be another commitment of one hundred million dollars of your capital, just if I kind of look at the one hundred and fifty million put in the two point two billion dollars you have so far. So just two parts of that question in the path to get to five billion and what are some of the cash flow demands of that?

31:37 Yeah, Tom. Thanks.

It's Kevin. I think we're still pretty comfortable with the -- that five billion dollar number over the next horizon, for sure.

In that, it implies a couple of new initiatives we may be putting on the board over the next year, to get us there. There may be a little slippage, but I think we're comfortable with what we're -- line of sight to that.

In terms of the -- what our capital would be, we've already disclosed that are we're going to put fifty million dollars into support Fund III on Instar when that rolls out. 32:09 And then obviously, couple of the other ventures, we’ll probably have some seed capital to work with there.

So I’m not sure we’re going to – we’ve circle the number yet. You can know that fifty is clearly committed on that.

And so it could be in that range or it could be higher, but it's not going to be significantly in the first year. And in other words, I wouldn't see us out of that band.

But again, it's stuff that we're comfortable with right now.

32:36 And you mentioned over the next horizon is that by the end of twenty twenty two?

32:40 Yeah. I think that's what we said.

And I think we're still looking at the end of twenty twenty two. And I said if there is slippage it maybe a quarter or two, but it feels like it's tracking to that at this point.

32:50 Well, if it feels like it's tracking, it's been flat over the last year. So how do -- within there, what are you reading in terms of looking it feel like it's tracking to get to that?

33:01 Yes. So we’ve had some monetizations that have been bringing things down.

We haven't had a lot of new initiatives as I said on the early part of the call. We have just rolled out a new product on -- with SAF, which we have high expectations, but there'll be a ramp time there.

At the same time, we've made an investment in our first early stage venture fund, that is -- hasn't been called yet. So, while we've got some things that we have started to ink.

It will take a little bit of time to get in that call. And there is things that we're working on that are in the pipeline that will also play into that.

So I'm not fluffed by the flattish given the fact we've had some monetization and carrier came through. I mean, Adrian you may have some other thoughts on that?

33:43 Okay. Thanks.

33:44 Sorry, I think that covers it. Anything else on that Tom?

33:48 No, that's good. Thanks, Adrian.

34:00 Yeah. Thanks.

So just to build on the conversations running excess capital deployments and the recent cash build, in the past few quarters, you’ve alluded to some of the commitments that you've made to various funds in the private alts side. I was wondering, if you might just be able to give us a sense of what your total unfunded commitments might amount to.

I'm just trying to keep track of that to better understand how excess capital might be at least partly earmarked?

34:25 Yeah. Thanks for the question.

It's Adrian. So there's about seventy seven million dollars of unfunded commitments that we have with the funds that are up and running now.

But one of the things you have to keep in mind is that when we look back over the years, a lot of these new commitments get funded through recycled capital, number one, and that would be monetizations from investments within the funds that we've invested in, but also cash earnings that are coming out of the GPs in the form of recurring management fee and other income as well as carried interest. So, you sort of have to look at a net number which would be much lower than that.

35:09 Understood. Okay.

And then just one high level question on the net flows outlook. Demand for retail investment products at the industry level has clearly been very strong this year, presumably a consequence of improving household balance sheet and higher savings rates among other factors.

Just interested to canvas your views on the sustainability and the trajectory of that trend as we see spending patterns begins to normalize, how quickly we might see demand for retail investment products normalize accordingly. I wouldn't expect you to have a crystal ball, but just thought I’d ask for your read on some of those macro dynamics so?

35:46 Yes. Nick, it’s Kevin, I'll start and I'll pass though you for some of the micro parts of our business on that.

Yeah. I think clearly, what's been a big benefit has been the higher savings rate.

We think that, that savings rate probably stays up a little bit elevated with the hybrid work world. So think about the fact that if folks only work downtown two or three days a week.

They are saving communing costs et cetera gas, things like that. There will be some offsets with higher inflated prices for the things.

But if you put that in the mix, there should be some extra disposable income in that. So, we've seen that going to some of -- we know it's going into some parts of the savings world in the market.

36:20 And how sustainable is that? I think it will wane out over time as we normalize hybrid and the downturn starts to come back.

I'd say probably second most important thing and maybe even more important is the market itself. If we – if the market can stays in this range, even if it's range bound to choppy, range bound from upward trend, flows will be fine.

I think where you get into trouble in our industry as we've seen is when you have market declines twenty to thirty percent the retail investor steps back and see redemptions. And this last recession was a little odd because it was so short driven, right.

The market dropped and came back pretty quickly. 36:56 So I think that's probably the bigger impact of the two on the macro front is what the market does over in the near term.

Having said that, I think things we're not calling – you are calling for like many others, probably some choppiness in here maybe some minor pullback, but we're not seeing a scenario where we think things are coming off of a cliff at this point. So, those are the two big drivers on the macro side.

And then, I don’t know, Judy, you can talk on what we're seeing?

37:22 I mean, just with AGF itself, I mean, we've been outpacing the industry by that fifteen percent year-over-year. And I guess what we're seeing is just the breadth and scope of our product offering out of the top ten selling funds, six or top quartile performing funds.

So we would be very optimistic that we could continue that outpacing industry going forward.

37:44 Yes. And I’d add to that Nick that there are all sort of things that are probably the highest demanding.

So it's not only strong performance but also in key categories of people. We focus the shelf to things that advisors really can't do themselves, so things that are harder to do, more global, et cetera., and that's where we're having the outperformance.

So there's some linkage to that sustainability there, I would suspect as well.

38:04 Okay. That’s good color.

Thanks for taking my questions. I'll pass the line.

38:23 Hi. Good morning.

Can you hear me?

38:24 We can, Graham. Good morning.

38:28 Okay. Great.

Your – the investment in the First Ascent, I just want to make sure I've got that correct. It sounded like, it’s a thirty million dollars commitment on year-end.

Is that incremental to the seventy seven million dollars Adrian that you flagged as commitments otherwise to your private alts platform?

38:45 Hey, Graham. No that's included because we have paid that commitment, yeah.

38:50 Okay. And then should we interpret that partnership as something that you're hoping will grow into a fund and a sort of fee-earning AUM opportunity for you?

39:03 Yes. It's a good question.

I mean, this is an investment fund. It's really a partnership and a structure.

We will have multiple points of revenue, if you think about it right, not just that as an LPCs, but also through the structure itself and some carry. But it really sets us up to do more with them in the future, what we think is one of the better early stage technology of venture firms out there.

So, think of it really as the first part of a multi-pronged approach to this.

39:32 Okay. Understood.

And then my second question not related, just the regulatory changes around client focused reforms. We've seen recently that some of the banks have announced that they're moving to a more proprietary model within the branch channels.

Any expectation that, that would have an impact on your flows at all or the independent asset managers largely?

39:55 It’s Judy, this has been a trend that has been developing over a number of years. And so for ourselves, and I do -- I would argue you with most of the independent asset managers, it will have a minimal impact as we really have not seen a significant sales flow through the bank branch in many years.

So, we're not concerned about it, it's an interesting development. It’d be interesting to see what the regulator says to it.

But at this point, we're not concerned.

40:26 Okay. Thanks, Judy.

And then maybe just to follow on that. Your mutual fund sales momentum is strong.

Can you give us some indication of how that is currently split across the different channels IIROC, MFDA and then your strategic partnerships?

40:39 Yes. The gross sales across -- while we're seeing about a fifty percent increase across IIROC and MFDA, both just in terms of the sales, in terms of the trajectory of where they're going and in terms of the split, we're seeing about twenty five percent I believe it's to IIROC and a smaller -- yeah, I believe it's about twenty five percent to IIROC and the rest – where is it?

I think that's correct. Sorry, I can get that number, firm it up for you.

41:12 And if it's directionally correct, then that's fine. Thank you.