IGM Financial Inc. (IGM) Earnings Call Transcript & Summary

Thank you for standing by. This is the conference operator. Welcome to the IGM Financial Second Quarter 2026 Analyst Call and Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Kyle Martin, Senior Vice President corporate Development and Investor Relations. Please go ahead.

Thank you Jason. Good morning, everyone, and thank you for joining us. On the call today we have Damon Murchison, President and CEO of IGM Financial and IG Wealth Management; Luke Gould, President and CEO of Mackenzie Investments; and Keith Potter, Executive Vice President and CFO, IGM Financial. Before we get started, I would like to draw your attention to our cautions concerning forward-looking statements on Slide 3 of the presentation. Slides 4 and 5 summarize non-IFRS financial measures and other financial measures used in the presentation. And on Slide 6, we provide a list of documents available on our website related to IGM Financial's 2026 second quarter results. With that, I'll turn it over to Damon.

Thank you, Kyle, and good morning, everyone. Today is my 24th quarterly earnings call and my first as President and CEO of IGM Financial. I'm excited and honored to be leading this great organization, and I want to thank James for his leadership and guidance over the past 5-plus years, and I look forward to working together in his new capacity as Chair of our Board. While many of you may know me from Mackenzie Investments in IG Wealth, let me provide a brief background for those of you who may be new to our story. I've been part of IGM's leadership team since 2014, including senior roles at Mackenzie Investments and nearly 6 years as CEO of IG Wealth. I've also stayed connected to the wealth and asset management businesses that are part of our strategic investments. I'm proud of what we've built as a company of team players united by a commitment to our clients, execution excellence and shared success. We enter IGM's next chapter from a position of strength and momentum. And today, I will provide my outlook on the opportunities ahead and share my priorities, starting on Slide 9. Since the planned leadership transition was announced in February, I've spent time meeting with employees, advisers, leaders and partners. I've also stepped back and looked at IGM as a whole. These conversations and reflections reinforce my confidence in our business and the strength of the leadership team across IGM. They also clarified where we can build on our strengths and advantages. To be clear, our strategy is working well. It's focused on the growth of our core asset and wealth management businesses, amplified by our strategic investments and supported by disciplined capital allocation. The markets we operate in are attractive but also highly competitive. Clients' expectations continue to rise and fee pressure remains a reality across the industry. That makes differentiation, productivity and disciplined execution even more important. My role is to sharpen our focus, move faster and concentrate resources on the opportunity with the greatest potential. That work is already underway. The actions we announced in June show this approach in motion and our trajectory, simplifying how we operate so we can direct more capacity to clients, advisers and profitable growth. Let me take a few minutes to break that down. Firstly, IG Wealth and Mackenzie are the core of IGM, comprising 75% of our earnings. Each has distinct strength and meaningful room to grow. At IG Wealth, our strength is rooted in our national network of financial planners, our deeply embedded financial planning culture, which fosters multigenerational family relationships and our omnichannel approach to servicing our clients. These strengths are most relevant to affluent Canadians whose financial lives tend to be more complex. Profitable growth comes from 2 levers that drive adviser productivity. First is increasing adviser capacity by leveraging omnichannel approach and using our industry-leading planning-first technology platform to ensure right client, right channel and give our advisers more time to service their existing clients and acquire new clients. Second is increasing adviser capabilities by strengthening our value proposition around our key wealth drivers, so our advisers can solve more complex family needs and our clients can benefit from our different financial planning advice across various dimensions. At Mackenzie, our advantages come from investment excellence across a multi-boutique model, a leading brand known for product innovation and multichannel distribution strength. This includes deep relationships with independent Canadian advisers, connections across the Power Corp ecosystem and growing global institutional reach. Growth comes from continued product innovation and bringing our strongest capabilities to more advisers, more clients and more institutions. Secondly, our strategic investments expand and diversify IGM's growth opportunity. These ownership interest in attractive wealth and asset management businesses connect us into different business models, client segments and markets and also strengthen IG and Mackenzie. Together, IG Wealth, Mackenzie and our strategic investments give IGM distinct and complementary sources of growth and drivers of shareholder returns. Lastly, our capital allocation priorities remain consistent. We will invest first in our core businesses where we can strengthen competitive advantages and drive profitable growth. We will maintain financial strength and flexibility as we balance disciplined investment in growth with share repurchases and dividend growth over time. And we will continue to concentrate on the wealth and asset management businesses we own today. So to be clear, building on our strategy that is working, sharpen our focus, simplify how we operate and invest with discipline. We will measure this progress in practical terms through better client and adviser outcomes, improved productivity, improved operating efficiency and ultimately, profitable growth and stronger earnings. I know this company well, I strongly believe in our businesses, and I'm ambitious about what comes next. Our leadership team has a strong track record of execution, and our second quarter results are the latest evidence of that. With that, let me turn to Slide 11 and talk about our quarterly results. Adjusted EPS of $1.41 per share was up 32% from a year ago. Higher average AUMA supported earnings, reflecting $2.2 billion in net flows and strong investment returns. We paired that growth with disciplined expense management and delivered operating leverage. Beyond adjusted earnings, the fair value of our 25% interest in Wealthsimple increased by 15% during the quarter to $2.6 billion, reflecting continued growth in the business. We also returned record capital to shareholders through dividends and share repurchases. We did that while maintaining financial flexibility with more than $900 million of unallocated capital and a conservative leverage profile. As shown on Slide 12, the operating environment was supportive in Q2. Strong financial markets generated average client returns of approximately 9% across IG and Mackenzie and industry flows remained positive. Markets are at or near record highs, although we've seen periods of volatility this year. We remain prepared for a range of market conditions as we enter the second half. On Slide 13, adjusted earnings increased across all 3 segments with both Wealth Management and Asset Management up more than 30%. Slide 14 shows our asset growth, which was not concentrated in just 1 or 2 businesses. Total AUMA increased by 19% year-over-year to $622 billion, with all 6 of our wealth and asset management businesses higher than a year ago. This brings me back to the actions we announced in June on Slide 15. We designed these actions to create more meaningful capacity to invest in the future of our businesses without simply layering on more cost and complexity. That capacity will support the next phase of our AI investment. This investment will be in people, in process and establishing the AI foundational platforms necessary to make it work. There are 2 principles guiding this work: simplification and personalization. Simplification means removing friction points and making it easier for us to work together, for our advisers and clients to work with us and ensuring that we are working with our clients in the best way that fits their needs. Personalization means using better data, technology and insights to elevate the client experience by enabling advisers to deliver more personalized advice, solutions and service. AI is a critical enabler of simplification and personalization. At IG, AI at the onset is giving advisers time back to help them deliver more personalized client experience. One example is how AI is supporting the client meeting flow, servicing relevant meeting, prep, insights before meetings and streamlining follow-up and documentation. At Mackenzie, AI is already embedded in parts of the investment process, helping teams process complex data and supporting idea generation, research and client service. Across IGM, it can reduce repetitive tasks, eliminate manual work and give people more time for high-value work that improves both the employee and the adviser experience. Our participation in the Sagard AI Fund complements the work by giving us another source of market intelligence and opportunities to engage with leading AI companies. The objective here is straightforward: better client experience, greater adviser productivity and sales team productivity, improved operating efficiency in support of growth and investment returns. And with that, let me turn to Slide 17 and talk about our Wealth Management segment's results. IG Wealth delivered another strong record quarter, including record second quarter new client inflows and the eighth consecutive quarter of positive net flows. That progress reflects our focus on mass affluent and high net worth Canadians where comprehensive financial planning is most relevant and valuable. IG was also recognized in the quarter by Forbes as being one of Canada's Best Employers for Company Culture. Turning to Slide 18. Gross inflows were $4.5 billion, up 26% from a year ago, and our trailing 12-month net flows rate was 1.5%. Investment performance was also strong, with 97% of our investment solutions rated 3 stars or higher by Morningstar. That performance continues to support client adviser confidence in IGM managed solutions, which represented 88% of our assets under advisement. Slide 19 shows that both mass affluent and high net worth clients contributed to our new client momentum, reinforcing the strength of our value proposition in the segments we are built to serve. Slide 20 covers mortgages and insurance, 2 very important parts of our comprehensive financial planning offering. I'll focus on insurance for a moment, where our new annualized premiums reached $33 million, significantly higher than prior periods. This reflects our continued focus on state planning part of the insurance market, which generally leads to policies with higher face values. Those higher policies are becoming a more meaningful part of the business as we strengthen our insurance capabilities and serve our client segments with more complex needs. While the timing of larger policies can make results uneven from quarter-to-quarter, our focus on insurance has led not to just larger policies over time, but the higher case count. The direction of the firm is clear. Insurance is becoming more a part of how we serve our clients and grow this business. Turning to Slide 21. These 6 industry wealth drivers capture the key financial challenges facing our target client segments in the areas where our advisers can help clients navigate these challenges and add value through financial planning advice. One of those areas is high net worth family wealth. During the quarter, we added 2 new partnerships with LegacyNex and Tamarind Learning to strengthen our capabilities in the family wealth dynamics, education and governance pillar. Together, these partnerships give our advisers more tools to help families build the confidence, knowledge and structure needed to manage wealth across generations. Now let's turn to Slide 22 and talk about Rockefeller. Rockefeller's client assets increased 31% year-over-year with market returns, organic growth and additional new adviser teams all contributing. Its iconic brand and comprehensive high net worth platform continue to attract leading adviser teams across the United States. Turning to Slide 23 and Wealthsimple. Wealthsimple's AUA reached $155.6 billion, up 84% year-over-year and $30.8 billion during the quarter. Record net flows of approximately $17 billion were the largest contributor. Wealthsimple's strong brand, digital-first experience and pace of innovation continue to drive client and asset growth. With that, I'll turn the call over to Luke to discuss Mackenzie's second quarter results.

Great. Thanks, Damon. Good morning, everyone. Turn to Page 25, you'll see highlights for Mackenzie and the Asset Management segment for the quarter. We are pleased with continued momentum in the quarter across many dimensions. Our AUM is up 20% in the last year to $269 billion. And during the quarter, we generated investment returns of 10.5% for clients. Our net sales continue to be strong with $1.9 billion in Q2 and $3.6 billion year-to-date. This was our best second quarter investment fund that build in 5 years and was driven by momentum in retail, which was up meaningfully from 2025. We also onboarded $2 billion in previously announced institutional wins during the quarter, and we also had multiple billion dollars of awards in Q2, which will fund during the coming quarters. At the top of the page, we've reiterated our strategic priorities at Mackenzie, raise the bar in investment excellence, build better product and deliver a great service experience. And all of our initiatives to advance the business are focused around these 3 priorities. On the top right, you'll see that during the quarter around this priority of raising the bar in investment excellence, we made important changes to our investment management organization that I'll review in a few slides. Also at the bottom of the slide, you can see the ChinaAMC and Northleaf continue to grow, and I'll speak to both of these on coming slides as well. Turning to Page 26, you can see the trend in the history of Mackenzie's net sales. On the left, you can see solid flows and continued improvements in our investment fund net sales. This is our second best -- this is our best second quarter and year-to-date results in the last 5 years, as mentioned. And you can see on the right, it was driven by these improvements in retail. And at the very bottom left, you can see the strong year-to-date overall net sales, which were at the same level as 2025, which was a record high net sales year for us, and this is driven by continuing inflows from institutional investors. We're expecting continued improvement over the coming quarters as we continue to have winning conditions in a number of places within our offerings. On Page 27, I'd highlight first on the bottom left that the industry environment remains healthy and the mutual fund net sales rate for the industry peers is around 2%, and we're slightly above this. In the top right, we've highlighted the continued growth in retail with $360 million in improvement year-over-year as well as the $1.8 billion in improvement in institutional separate account net sales. Our $1.5 billion in institutional SMA net sales in the quarter included the $2 billion in onboardings referenced earlier, partially offset by some net redemptions for other clients. These onboardings continue to reflect a good mix of some of the largest public pensions globally as well as sub-advisory to financial institutions. And in the bottom right, overall investment performance continues to be solid, and our share of assets residing in 5-star funds remains at its highest level in 4 years, and we have compelling performance across a range of relevant strategies. Moving to Page 28. I have 2 updates related to our strategic priority of raising the bar in investment excellence. First on the left is a reminder of Mackenzie's boutique approach. We have autonomous teams with their own demonstrable investment edge who leverage a common support platform. This approach provides diversity and breadth in our capabilities with no groupthink while ensuring that our teams have the resources and support that they need to generate alpha and harness their respective investment edges. In the middle, you can see that in the quarter, we made a number of changes to bolster investment excellence, enhance talent management and drive technology enablement. We have reduced our number of teams from 15 to 9 through a combination of rationalization and coordination of kindred spirit franchises. Part of this was the rationalization of 3 boutiques and a reassignment of their mandates to our global quantitative equity team and our multi-asset strategies team, and you can see this on the right, #3 and 4. As well, we brought together a number of teams through coordination of talent and shared resources, and you can see this on the right #1 and 2. These changes are designed to ensure that all of our capabilities have a clear edge and stand proudly on the world stage with a clear path to commercial relevance across client segments. The changes are also designed to bolster the scale, talent management and resources of each team and to foster AI and technology enablement. Also on the bottom left, you can see that we completed a multiyear initiative during July with the completion of our middle office and data foundation with our partner, BNY Mellon. This middle office platform provides a world-class operating environment for our investment teams to do their best work and also provides a strong foundation for tech and AI enablement. Turning to Page 29, you can see the performance in net sales for our retail investment fund by boutique. I'd highlight a few things on this slide. First, in the third column from the left, we continue to see noteworthy retail flows into our global quant equity boutique. I'd note that we do not view these flows as being near their potential. We have over 15 retail mandates here in large categories and the track records are exceptional. This holistic quant all-weather approach that marries AI and HI is compelling in terms of both the level of alpha and the consistency of alpha across different market environments. I'd also note in the middle, we reassigned responsibility for our growth SMID team to the quant team during the quarter, expanding our quant retail lineup further. And as you scan across the top section of the slide, you'll see we have very compelling performance in a number of relevant product categories at the moment where we're leading in. This includes our multi-asset strategy team, our value team and our resources and energy evolution Greenchip team among others. Turning to Page 30, a few comments on the Chinese investment fund industry. Industry long-term assets were up 10% in the quarter, driven by strong Chinese equity market returns in the quarter. Industry long-term fund net sales were very slightly positive in the quarter. And as discussed last quarter, as part of robust equity market improvements, the industry had net outflows of passive ETFs of around CNY 800 billion in the quarter, reflecting activities by the national team. This was offset by net inflows into fixed income products. And on the right, I'd highlight ChinaAMC maintained its rank of #2 in the industry with a 5.2% market share. On Slide 31, ChinaAMC ended the quarter with total AUM of CNY 2.9 trillion, up 3% in the quarter. At the bottom, you'll see ChinaAMC had CNY 145 billion in net outflows during the quarter, which, like Q1, reflected participation in these industry passive ETF net outflows for the industry. And I would remind that ChinaAMC is industry leader in the ETF space. Turning to Slide 32. Northleaf continued to deliver strong asset growth, supported by $4.3 billion of new commitments over the last year, and this included just under $1 billion in the second quarter. I do want to make a few special remarks on Northleaf as we've reached an important milestone this quarter as we near the 6-year anniversary of our partnership. First, I do want to highlight how very proud we are of Northleaf's development and success over the last 5 years. As you can see here, the business has grown at a compound annual rate of approximately 20% over this period and is now 2.5x the size that it was in 2020, with global investment reach across private equity, private credit and infrastructure asset classes. Importantly, it has also expanded its clientele internationally over this time, reaching a milestone of having the majority of its commitments coming from outside Canada in 2024. The partnership is also helping fuel opportunities across IGM and the broader Power Group ecosystem, and we view private markets as a very important asset class across so many of our business lines. July of this year marks another important milestone in the partnership. As contemplated in 2020 and communicated publicly at that time, the original arrangements include the rights and obligations related to additional equity and voting interest after 5 years. We could not be more pleased with the series of transactions that we completed in early July, which restructured the original arrangements with 2 very important outcomes. First, the Northleaf management team will continue to have this consistent meaningful equity participation in the business over the long term, preserving the strong alignment that has been so important to the success of the partnership. Second, Stuart Waugh and his leadership team will continue managing Northleaf focused on serving its investors and continue to build the business over the long term. And I'll now turn the call over to Keith Potter, and Keith will cover the financial results, and he will also cover the accounting implications as we start consolidating Northleaf as a consequence of these transactions.

Thank you, Luke, and good morning, everyone. Turning to Slide 34. The second quarter delivered strong broad-based results with adjusted EPS of $1.41, up 32% year-over-year. Reported EPS was $1.12. The main adjusting items were the previously announced restructuring charge and the typical adjustment for Great-West Life earnings. Adjustments also include a gain on partial sale of an investment in associate and a mark-to-market impact of the new Rockefeller management equity program. A few comments on the restructuring charge and our reinvestment priorities. As Damon commented, AI is a foundational technology for the future that will require meaningful investment. We challenged the leadership team to identify structural savings to create capacity for this investment without making it additive to our existing priorities. These savings will be reinvested in people, process and technology to build comprehensive enterprise AI foundational capabilities and deploy AI responsibly and at scale solutions to make the business stronger and more efficient. The Rockefeller adjusting item related to a new management equity program that aligns management over the long term, which I commented on at a high level during the Q4 call. Under IFRS, the equity program will be expensed based on cash settled accounting and remeasured quarterly based on their fair value. The impact is $900,000 this quarter. Because RCM is growing rapidly, we believe future expense will be quite volatile, therefore, are excluding it from adjusted results to improve comparability period-over-period and to better reflect the performance of the underlying business. And this differs from IGM's other option programs where expenses follow equity settled accounting and are generally expensed on a straight-line basis. Turning to capital allocation. We returned $345 million to shareholders in the quarter, including $200 million in share repurchases. We also ended the quarter with unallocated capital of $935 million and reduced our gross debt-to-EBITDA ratio to 1.25x, which leaves us with substantial financial flexibility as we continue to return capital to shareholders. Finally, Luke commented on the long-term partnership with Northleaf that we are thrilled with. And as discussed, we've restructured the 2020 arrangement to preserve management equity participation while providing the flexibility to recycle ownership over time as part of succession planning. You will see in the financial statements, we have subsequent event disclosures related to the transactions that closed in July. If you have any questions on the accounting or other points of clarification, please reach out to the Investor Relations team, including Kyle. There are 3 things that I think you need to know. First, effective July 1, we will consolidate 100% of Northleaf's revenues, expenses, assets and liabilities on a line-by-line basis within the Asset Management segment, with the portion owned by Northleaf Management and Great-West presented as noncontrolling interests. And as a reference point, we expect our reporting for Northleaf to be similar to how we presented IPC back in 2022, so you can use that as a reference point. Importantly, this is a change in accounting presentation rather than underlying economics or how the business will be managed going forward. Second, as a result of the transaction, Mackenzie's economic interest increased slightly from 56% to 60.9%. And lastly, based on current estimates, we do expect to record a noncash gain of $187 million or $149 million after noncontrolling interest in the third quarter. And this gain stems from moving from equity accounting to Northleaf's consolidation accounting. I'll hit on remaining highlights from the quarter on upcoming slides, including Wealthsimple and capital management transactions. Turning to Slide 35, you can see our AUM&A and flow trend. Average AUM&A increased 4.3% relative to Q1, but period ending assets are up 9.4%, which sets us up well for the third quarter. On Slide 36, higher assets at IGM drove revenue growth of 18.6% year-over-year and adjusted EPS up 31.8%. Results were well diversified across wealth management and asset management and across our core businesses as well as strategic investments. Turning to operations and support business development expenses. We are maintaining expense growth guidance of 4%. Slide 37 presents key profitability drivers for IG Wealth Management. On the left, you can see average AUM&A was up 3.9% from last quarter. And on the right, our advisory fee rate decreased 0.6 basis points, in line with guidance provided last quarter. And as a reminder, the decrease in fee rate was driven by advisers working with clients during the quarter to reinvest cash into long-term investment solutions. And as a reminder, cash spreads are higher than the standard advisory fee rate. We expect this to continue in Q3 at a more moderate rate and expect fee rates to come down 0.25 to 0.5 basis point. The asset-based compensation rate was up slightly in the quarter and expect a modest increase in Q3. On Slide 38, IG's overall earnings of $174.7 million is a record quarter and up 32.9% year-over-year on revenue growth of 19%, demonstrating strong growth and positive operating leverage in the business for consecutive quarters. On point 2, other financial planning revenue continues to demonstrate growth year-over-year, supported by strength in the mortgage and insurance businesses. Other product commissions is up in line with the growth of insurance sales. And as we look forward to Q3, we do expect growth to continue in insurance relative to last year, but perhaps not at the same pace we saw in Q2. With respect to expenses, as I mentioned on the last call, Q2 is a seasonally high quarter and expect expenses to come down in Q3, a seasonal pattern that looks similar to 2024. Moving to Mackenzie on Slide 39. Average AUM was up 4.4% versus Q1. And on the right, the third-party rate, excluding Canada Life, decreased 3.9 basis points, which is in line with guidance. As a reminder, we had 3 main items impacting the rate this quarter. First, the success of our strategic partners and institutional onboarding; second, the impact of previously announced fee changes that became effective April 1; and third, the nonrecurring performance fees earned in Q1 that did not repeat in Q2. As we look to the next quarter, we expect the third-party fee rate, excluding Canada Life to decrease approximately 1.5 basis points and the overall third-party rate, a decline of approximately 0.7 basis points, primarily due to the continued success of these strategic partnerships and the institutional onboarding. And this includes a full quarter of what was onboarded in Q2 as well as new wins we expect to onboard in Q3, which Luke spoke to. Turning to Slide 40. Mackenzie's earnings of $75.3 million are up 30% year-over-year, and Q2 illustrates the operating leverage in the business with revenue up 14% and earnings up 30%. Operations support and business development expenses growth came in at 3.4%, in line with expectations. Turning to China and S on Slide 41. Luke already commented on AUM and earnings were $43.9 million in Q2, up significantly from Q1 of last year. With strong Q2 performance in the Chinese equity markets, the company did benefit from seed capital fair value gains. And excluding the impact of these gains, earnings would have been in line with Q1 results. Slide 42 has earnings contributions from each company. First, Rockefeller earnings are in line with expectations. Northleaf had earnings of $6.2 million, net of noncontrolling interest for the quarter. And as part of the Northleaf and July transactions, we did receive a $45 million dividend, comprising a customary annual dividend and a special dividend representing distribution of excess cash. On Slide 43, we continue to make progress against our capital allocation priorities. We returned $345 million in capital to shareholders in Q2, which is an all-time high. And at the same time, we've maintained $935 million in unallocated capital, and our gross leverage ratio for the quarter is lower at 1.25x. We also saw the cash dividend payout ratio drop to 53%, excluding the special dividend from Northleaf. And finally, in June, we issued $400 million in debentures and subsequently redeemed debentures maturing in January of 2027. Because the redemptions settled on July 2, both the new debt and cash from the issuance are recorded on the balance sheet for Q2. We presented our unallocated capital and leverage ratios on this slide, net of the redemptions that settle on July 2, which is the comparable baseline for Q3. Turning to 44. IGM's indicative value is approximately $94 per share. And as a reminder, we derive the indicative value of our core operating companies using average PE multiples from a diversified group of wealth managers for IG and asset managers for Mackenzie as of market close on July 24. In the quarter, we increased the fair value of Wealthsimple from $2.26 billion to $2.59 billion. The company performed exceptionally well, as you've heard, with record net flows of $17 billion in Q2 and AUM growth of over $30 billion. The fair value considers Wealthsimple's business performance driving upward revisions to revenue expectations, and we also consider public peer valuations as well as the third-party transactions that closed at the end of last year. The value of Northleaf has been adjusted to reflect the transactions that took place in July at fair market value. That will end our prepared remarks, and we'll open the call for questions.

Our first question comes from John Aiken from Jefferies.

Damon, a couple of questions on the AI strategy. I was wondering, the Sagard AI Fund, you said that has benefits. Is this just being able to take a look at what the companies are doing that Sagard is investing in that you get access to as an investor? Is that the theory behind that?

Yes. So that's one of the benefits is to get access to companies that are excelling in the AI field and their leadership and learn from them. But it's much broader than that. When you think of it, it's much like Portage on the fintech side. And you take a look at example, IG and the number of commercial partnerships we have with fintech companies, a majority of them stem from Portrage. So there's an opportunity for both Mackenzie and IG to work with Sagard AI Fund and talk about our strategy and where we want to go and for them to align the organ -- the companies that they're invested in with where we want to be so that we can ultimately drive both top lines.

And then you mentioned broader, I guess, integration with the Power group of companies. Can you let me know in terms of is this just scaling cost effectiveness? Or is there actually learning that you can get from the various companies to import into IG Hub?

So I just want to confirm your question. So broader relationship with Power group of companies.

With the AI strategy, yes.

Got you. Okay. Yes. So yes, 100%. So one of the benefits of being in the power ecosystem is that you get to learn from a number of different leadership teams, a number of different organizations. So whether it's Portage on the fintech side or Diagram on the fintech side, there are 2 different type of fintech companies under Sagard, their private asset management arm under Sagard or now under the Sagard AI Fund, we get to benefit from that, both Luke and IGM to work with these companies. And it's -- the connectivity is thought leadership. It's learning from their leadership teams and how they're thinking about things, not just today, but about the future so that we -- as we envision our future, we can ensure that there's some a little bit of alignment and then talking about how we can fill our gaps. ultimately, we come to them with business problems, and they would come back with a fintech or AI solution to help fit that gap.

Our next question comes from Scott Fletcher from CIBC.

I wanted to ask a question on the institutional awards and the pipeline for what that could look like going forward. I think you've obviously had some great success attracting those assets. But curious whether there's more to come there or if this is sort of a good opportunity at this point in time?

Thanks, Scott. This is building momentum. We've had some awards of the past quarters fund in Q1 and Q2. And now the awards of Q2 were roughly $5 billion. Most of it is going to fund during Q4 and Q1. The fees are respectable kind of -- if you look at Slide 39, somewhere between the high number on that page, which is the overall third-part fee rate and the lowest IG and Canada Life based on their scale. And yes, the Q2 awards really reflect a lot of what's in the pipe ahead of us that we're working on. The Q2 awards were a function of many clients, a lot of large sovereign wealth funds, public pensions, traditional institutional, some financial institutions. So many clients, many mandates. It reflected awards to 4 of our teams. The largest part of that is obviously Quant right now, where we do have a very compelling story. And yes, so heading into the back half of the year, the pipeline is feeling very good. And yes, we certainly got enough to fuel us into 2026 and into 2027.

Okay. That's really helpful color. And then staying with the asset management side. On the changes you made at Mackenzie, just wondering if there's potential for additional operating leverage looking forward in that segment? Or if this is a case similar to the June announcement where savings you'd have -- any savings you generate there would be reinvested in the sort of AI or other efficiency tools?

Thanks, Francois. Yes, on Page 28 on the change we made. So those changes were made in May. So those are Q2 changes. This is -- we have declared a large part of them is really reinvesting in talent and technology to improve our cost over time and our competitiveness. And on operating leverage, that's one of the features of Mackenzie's P&L. We've got a lot of operating leverage here. You can see that in our Q2 earnings growth of 30% year-over-year. And so yes, as the business scales, there's a lot of leverage in it.

The next question comes from Tom MacKinnon from BMO Capital Markets.

Just a question with respect to China AMC. The industry shows 14% growth in last year in terms of assets, yet China AMC is just up 2% I think you had mentioned strong performance. So it's just what's driving all the money coming out of China AMC versus what may not be the same kind of net flow issue with respect to the investment fund industry. And then if you can help me understand the seed capital gain or the seed gains you got out of China AMC, just kind of given the fact that there hasn't really been a lot of growth in the assets. Is it just really good performance, but everybody is just taking their money out of China AMC?

Yes, good question. And actually, I'll I'll actually address some of the same -- refer you to the transcript from Q1 as well. So over time, and by time, in the last 3 years, it's been reported China's national team has engaged in a market stabilization program. And the way that they did that was by investing in passive ETFs with a number of providers and China was one of those. What we saw in Q1 and again in Q2 is in Q1, based upon the strength of equity markets during the fourth quarter, we did see the national team, and it was reported in the national team removed about half of the investment that they had in passive ETFs. and that impacted ChinaMC, given that they have leading market share and they would have been about 20% to 25% of that activity. And then once again, in Q2, equity markets in China increased by 10% in the second quarter. And as a consequence of that, the national team did reduce its holdings of passive equity ETFs further. I don't have transparency to what's left there. But what I would say is we view this as real signs of confidence based upon that activity, it is really a bullish sign, equity markets improving and really the stabilization money coming out. On the seed capital, it reflects those same trends that equity markets were up 10% in the quarter and the seed capital on the balance sheet of ChinaMC participate in that. Does that make sense? As far as the main headline is because of ChinMC's leadership in past ETFs and the participation that they enjoyed as part of this stabilization program, that's what explained the outflow in Q1 and Q2.

No, that's very helpful. And other question with respect to just any kind of guide as to how the advisory fee rate might -- you've given kind of what you think it would be at IG Wealth for the next quarter. How would that -- how should that be trending over the next 24 months, if you will, just continued pressure? And same with the third party, excluding Canada Life fee rates that you've provided a guide just for the third quarter, but how should we be thinking about that line going forward?

Tom, it's Keith here. I'll start with the IIG advisory fee rate. Really, what's been driving the fee rate last quarter and this quarter is the move from cash into long-term investment solutions. I think we'll see a bit more of that in Q3 and Q4. And then we have distributions at the end of the year where cash increases again. So you'll see that rise. I would guide to, as I mentioned, 0.25 to 0.5 basis point coming down in Q3 and probably less so in Q4. And we also did take some -- just adjusted how we manage the advisory fee rate. There was that auto reset that we've moved away from to provide more stability in the rate. So we think a lot of that change is going to come from just the change in cash. But as we do acquire more high net worth clients, they're generally going to have lower fee rates, but I don't think you're going to see as much pressure on that rate as what you've seen over the past couple of years. At Mackenzie, the fee rate that we're seeing in the third-party rate, I mean, it's really been driven by institutional onboarding. And if you just neutralize that, the only other real pressure in the fee rate is the mix between mutual funds and ETFs where we don't charge an advice -- sorry, an admin fee on the ETFs. But as that rate comes down with more institutional onboarding, it's going to come with more revenue.

The next question comes from Bart Dziarski from RBC Capital Markets.

I wanted to just ask around kind of capital allocation framework. So you're ramping up the buybacks, the dividends paid, but leverage keeps ticking down and you're at about 1.25 on a gross basis. Is that the right leverage ratio we should be thinking about maybe longer term? Or can we see that leverage ratio continue to tick down? Or maybe would you look to increase it?