IGM Financial Inc

TSX:IGM

Earnings Call Transcript 2021-Q1

[Operator]

Thank you for standing by. This is the conference operator. Welcome to the IGM Financial First Quarter 2021 Earnings Results Call.[Operator Instructions] I would now like to turn the conference over to Keith Potter, Senior Vice President, Finance. Please go ahead.

[Keith Potter, Head of Investor Relations & Treasurer]

Yes. Thank you. And good morning and welcome to IGM Financial's 2021 First Quarter Earnings Call.Joining me on the call today are James O'Sullivan, President and CEO of IGM Financial; Damon Murchison, President and CEO of IG Wealth Management. We have Barry McInerney, President and CEO of Mackenzie Investments; and Luke Gould, Executive Vice President and CFO of 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. On Slide 4, we summarize non-IFRS measures used in this material. On Slide 5, we provide a list of documents that are available to the public on our website related to the first quarter results for IGM Financial.And with that, I'll turn it over to James O'Sullivan.

[James O'Sullivan, President, CEO & Director]

Okay. Well, good morning, everyone.Q1 2021 was a record-setting quarter for IGM. We achieved record assets under management and advisement in the quarter of $248.5 billion, up 3.6% in the quarter. We also achieved record-high total net flows of $2.2 billion with strength from IG Wealth Management and record-high Q1 net sales at Mackenzie. IGM's Q1 earnings per share were $0.85, also a record high, up 25% from last year.IGM published its seventh annual sustainability report yesterday. We continue to focus on areas that matter most to our business and stakeholders.Finally, we're thrilled with the growth of Wealthsimple and the value that it has been creating for our shareholders. It's incredible really how much the company has grown since the fundraising round in October 2020. And as announced this past Monday, the value of our interest has grown by approximately $900 million, which is equal to $3.78 per IGM share pretax. I'll speak more to this in a few moments.Turning to Slide 8, on investment returns. We continue to see strong equity market increases across major indices, while fixed income returns turned negative with the sharp increase in interest rates experienced in the quarter. Overall, IGM's average client investment return was 2.7% in the first quarter and 4.4% year-to-date April 30, 2021. To this point, the markets have shrugged off the COVID's third wave as governments continue to provide stimulus, and market participants anticipate an economic rebound as vaccines roll out. While the pandemic is certainly not over, as we get hit by the third wave here in Canada, there are reasons to be optimistic as more and more Canadians are vaccinated each day and we can envision getting back to something more normal in the near future.Turning to Slide 9. Q1 long-term mutual fund net sales were $38.8 billion for the total industry and $18.9 billion for industry asset manager peers. This is the best fund industry Q1 net sales in Canadian history.Turning to Slide 10, on IGM's results for the first quarter. Average assets under management and advisement of $243.9 billion increased $57.9 billion or 31.1% year-over-year, including approximately $30 billion related to the acquisition of GLC and Greenchip which closed in December of last year. Q1 2021 net earnings per share of $0.85 is a record-high first quarter result for IGM, representing a 25% increase relative to last year.Slide 11 highlights earnings contributions from each of our segments, where we have brought our disclosures down to the net earnings line as announced in March of this year. IGM's year-over-year increase in net earnings was driven by strong results within Wealth Management and exceptional growth at Mackenzie and China AMC. Our proportionate share of Great-West Lifeco's earnings also increased meaningfully compared to Q1 2020.Turning to Slide 12. IGM consolidated net flows were $2.2 billion during the first quarter, a record-high result driven by impressive net flows at both IG wealth and Mackenzie Investments. I believe this quarter's results demonstrate continued momentum in these businesses that Damon and Barry will speak to in greater detail in a few moments.As I mentioned, we released IGM's 2020 sustainability report yesterday, which can be found on the IGM Financial website. The report includes comprehensive information for you and your colleagues and has been prepared in accordance with GRI standards. Within the report, we also provide an index aligned to SASB disclosures and a greater -- excuse me, and the TCFD report. We're focused on the material ESG topics that matter most to IGM and our stakeholders, with our strategy focused on building financial confidence; growing sustainable investing; and accelerating diversity, equity and inclusion in finance.In 2021, we are also focused on furthering our role in combating climate change and implementation of the TCFD recommendations. We're proud to be recognized at a leadership level for CDP for the fourth year in a row and being named to Corporate Knight's 2021 global 100 most sustainable organizations. I'm pleased to be leading a company where sustainability is integral to who we are, and we are continually evolving what we do to make the greatest impact for our company and our stakeholders.Turning to Slide 14. Wealthsimple has experienced extraordinary growth over the past 6 months, with AUA increasing by 54% to $12.7 billion and clients growing more than twofold to over 1 million. The equity raise has demonstrated the value being created for shareholders, with IGM's interest valued at $1.45 billion, which is a compound annual return on investment of approximately 80% on our investment of $187 million. As part of the fundraising round, we will be participating in a secondary offering with proceeds of approximately $295 million pretax and will continue to be the largest shareholder with a 23% fully diluted interest valued at $1.15 billion.Transaction accomplishes 3 key things. One, it includes a new funding round that will support Wealthsimple's strong momentum and growth. Two, it provides IGM the ability to monetize value for our shareholders while remaining a significant owner of Wealthsimple and continuing to support the company as it creates additional value. And three, voting control is maintained by the Power group, which provides strategic flexibility. Proceeds from the transaction provide us with financial flexibility or dry powder which could be used for financially attractive acquisitions that bring new capabilities or access to distribution. We would also look to share buybacks in the context of our overall capital allocation priorities and opportunities. The growth and evolution of Wealthsimple and our other strategic investments further reinforces the importance of applying a "sum of the parts" approach to valuing IGM. Luke will expand on this in his remarks, but first I will turn the call over to Damon to review IG wealth's results.

[Damon Murchison, President & CEO of IG Wealth Management]

Thank you, James.Turning to IG Wealth Management's highlights for the first quarter of 2021 on Slide 16. AUA increased 3.6% during the quarter to $1.7 billion (sic) [ $107 billion ], driven by a combination of client investment returns of 2.6% and net inflows of $1 billion. Net flows were the best result in over 2 decades. We saw record-high gross inflows with increased client productivity, which was driven by success in the mass affluent and high net worth segments of the market. And net sales into IGM products were $713 million during the quarter, a substantial improvement relative to net redemptions of $36 million during Q1 of last year. I'll also discuss the strong performance of our iProfile fee-based program and the recent announced enhancements, including the expanded use of private market investments and alternative investment strategies.Turning to Slide 17. This highlights our net flow results at IGM over the past decade, on the left; and you can see the strong net flows of over $1 billion in the quarter. The chart on the bottom left and on the right illustrates how our momentum, which really started in early 2020, has continued into April, with both net flows and net sales improving relative to recent years. April is typically a seasonally slow month, but we had a record-breaking month this year. Growth -- gross inflows of over $1 billion is an all-time high for the month of April, and net inflows of $131 million is the best in 20 years and the third best all time.Turning to Slide 18. Q1 2021 gross inflows increased approximately 21% year-over-year to $3.6 billion, the highest Q1 result in the history of the company. At the same time, our gross outflow rate improved from 11.2% to 10.2%. You can see the substantial improvement on net flows and net sales into IG Wealth Management and Mackenzie products. I'll take a little bit of a deep dive on this on the next slide, so let's turn there, to Slide 19.On our last call, I walked through some of the changing dynamics in IG's offering, our AUA and net flows growth and how AUA transitions to AUM. Starting on the left part of this slide: In the second column, you can see that Q1 2021 net inflows of $1 billion, which was comprised of $649 million of cash and short-term savings and $365 million of third-party in-kind transfers from other dealers. In the third column, during the same time period, we have seen significant outflow from these categories, resulting in net sales into IG managed solutions and Mackenzie funds totaling $713 million.As we move forwards, we expect deposit flows and income transfers of third-party funds and securities from other dealers to continue to increase, driven by new client acquisitions, increased share of wallet from our existing clients and recruitment of experienced industry advisers. Flows into our managed solutions will also continue as consultants work with their clients to provide comprehensive financial planning and leverage the benefits of utilizing well-constructed managed solutions.Now let's turn to Slide 20. I'll touch on the productivity of our consultant network and the key driving factors behind this trend. Both our consultant recruits and our experienced consultant practices delivered significant increases in productivity in Q1 relative to past years. As we mentioned on prior calls, the success that our consultants are having is related to new client acquisition within the mass affluent and high net worth segments of the market and increasing our share of assets with our existing clients. This quarter, we have some impressive stats to share with you in this area as we look at our gross inflows through [ a new lens ] on the right-hand part of the slide.Inflows from households that have over $0.5 million or more with IG rose 30% year-over-year and 76% relative to 2019. And within these figures, flows from new client acquisition nearly doubled over the past 2 years. Q1 2021's gross inflows from client relationships with less than $500,000 also increased by approximately 23% relative to 2 years ago, with the vast majority of this increase coming from the $100,000 to $500,000 mass affluent segment. These are great results for our consultant network and I'm very proud of the progress we've made, so far, but even with these results we are clearly still building momentum here as we continue to invest in our platform, our people and our capabilities.Now let's turn to Slide 21. This slide highlights the recent enhancements to our iProfile Private Portfolios. We -- where we're building on historically strong performance. For context: iProfile includes a series of fee-based solutions with approximately $22 billion in AUM. And this well positioned -- well positions us for the mass affluent and high net worth segments of the market. The performance of the iProfile program has been quite strong, but these assets have never been captured in our reporting performance information in the past. Starting in Q1, however, this changes, where iProfile performance is now being reported by Morningstar and included in our MD&A. As of March 31, 84% of the AUM in iProfile is rated 4 or 5 stars by Morningstar, and 100% 3 stars or better.We've been continually stepping up our game as it relates to our product capabilities aimed at servicing the mass affluent and the high net worth segments of the market, and iProfile has been a key focus of ours. During the month of March, we announced the introduction of discretionary model portfolios that will be rebalanced, as outlined in our investment policy statements, specific to each client's investment goal. At the same time, we've added 6 new private pools that bring new [ tools ] to the program, including expanded use of alternative investment strategies and private market investments. This slide highlights an example of one of the model portfolios. Building on this, in April, we introduced a new private equity mandate within the U.S. equity pool and announced commitments to Northleaf Capital Opportunities Fund. Going forward, the discretionary model portfolios will include active asset allocation; public equity; and fixed-income securities, liquid alternatives and a range of private market investments, including private real estate, private credit and private equity. These solutions will continue to offer access to leading global asset managers like Mackenzie Investments and Northleaf Capital Partners.Lastly, let's turn to Slide 22. Having excellent products like iProfile is critical to our success. And these products are deployed with one goal in mind: to fulfill the financial plan tailored to meet the needs and the goals of each of our respective clients. As a reminder: At IG we refer to our financial plans as IG Living Plans, and fulfilling an IG Living Plan requires more than just investment products. Our estate planning, mortgages, cash management, insurance products and services are equally important. Consultant client usage of these products was another highlight for this quarter, with our insurance volumes and mortgage funding increasing 23% and 25%, respectively, from last year. In addition, all-in-one HELOC origination volumes were up 56%. You will continue to see an emphasis on these areas and growth in these areas as part of the business going forward.I'll now turn it over to Barry McInerney.

[Barry Sean McInerney, President & CEO of Mackenzie Investments]

Thank you, Damon. And good morning, everyone.I'll begin my comments on Mackenzie's Q1 results on Slide 24. We reached a new record-high total AUM of $191.6 billion at the end of the quarter, driven by strong returns for our clients and all-time-high Q1 net sales of $1.5 billion. Our record net sales reflect both strong Canadian retail investment fund industry flows, which also broke records during the quarter, and our continued ability to win market share from our competitors. Q1 marked our 18th consecutive quarter of positive retail investment fund sales, and the momentum continues to be broad-based across asset classes and categories for both mutual funds and ETFs. We also achieved several important milestones to further build on the momentum of our sustainable investing offerings I'll elaborate on a subsequent slide, along with a few highlights on our strategic relationship with Northleaf Capital Partners.Slide 25 highlights investment fund flows, which include adjustments for large fund allocation changes that can impact the comparability of results over time. The chart on the top left compares Mackenzie's record-breaking quarter to the last decade. You can see that our 2021 net sales results are a multiple of prior years. This pace has continued into April, with record-high investment fund net sales of $539 million during the month and $6 billion on a 12-month trailing basis.Slide 26 presents Mackenzie's Q1 2021 operating results. Total mutual fund gross sales of $4.5 billion were up 23% year-over-year, driven by our retail business. Mackenzie continues to gain market share, as demonstrated by our long-term investment fund net sales rate, which was 8.1% at the end of April. In terms of Morningstar Ratings, 49% of Mackenzie's AUM were in 4- or 5-star rated funds, and 15 of our top 20 funds are rated 4 or 5 star for F series.Turning to Slide 27. Mackenzie's results in the retail channel have been very strong with first quarter investment fund net sales of $1.9 billion, including $1.6 billion from mutual funds and $300 million primarily from active and strategic beta ETFs. There are a few catalysts for our success: Mackenzie's top-rated sales organization in the country, a wide-ranging suite of investment products and solutions supported by both strong performance and innovation. Of our top 20 net selling funds in Q1, 5 were launched within the last 1 to 2.5 years, which means they did not yet have Morningstar ratings. And a very favorable retail operating environment that has only amplified the opportunity for leading players like Mackenzie.Slide 28 outlines the breadth of our retail net sales strength across our investment boutiques and the short-term investment performance dynamics that we've seen in recent months. After an extended period of outperformance of growth-oriented funds, we witnessed strategies which were with value tilts beginning to outperform.Our capabilities in the value space are represented by our Cundill and North American equity teams. While their value-oriented products lagged their growth peers previously, the recent shift in market dynamics has led to near-term outperformance by these 2 boutiques as measured by the 6-month asset weighted percentiles. And of course, difficult to say where exactly markets go from here and whether value or growth will outperform in the near term. At Mackenzie, we're focused on being Canada's preferred global asset management solutions provider and business partner. And our multi-investment-boutique structure positions us well to have relevant and strong-performing investment products through various market cycles. I would also note on the slide that we are seeing exceptional flows into sustainable investing, which leads us to our next slide.Slide 29 highlights Mackenzie's 5 growth catalysts that are reshaping the global asset management industry. I'd like to highlight a few developments on the sustainable investing and private markets themes today.As we discussed in our last call, we acquired Greenchip Financial during December, bringing in house the strong capabilities behind our top-performing environmental equity fund. As of March 31, this team now manages over $1.4 billion. Building on this success, we launched the Mackenzie Greenchip Global Balanced Fund during April, the first environmentally themed balanced fund available to Canadian retail advisers and investors. This fund brings Greenchip's capabilities to the important balanced category and leverages our fixed income team's established sustainable investing expertise. We also launched the Mackenzie Global Sustainable Bond Fund, one of just a handful of sustainable fixed income products available in Canada today. Also in the month of April, we established our second sustainability-focused investment boutique. This new boutique will be led by Andrew Simpson, who has 20 years of experience in investment management and has played a pioneering role in the Canadian sustainable investing space.Mackenzie's approach to sustainable investing is providing Canadians with the opportunity to invest with impact through funds that are designed to generate long-term competitive returns while supporting positive ESG outcomes. We are working to strengthen the role of sustainability in our culture, corporate practices and every investment decision we make. Our partnership and equity ownership in Northleaf represents a key part of our strategy in alternatives and private investment markets. We are excited about the excellent fundraising of $1.5 billion achieved by Northleaf -- the Northleaf team during the first quarter of this year. And during March, we officially launched our Mackenzie private credit fund, which brings Northleaf's private credit capabilities to Canadian retail in a new and exciting way. And we have concrete plans to launch additional private markets products in the near term.I will now turn things over to Luke.

[Luke Gould, Executive VP & CFO]

All right, thanks, Barry. Good morning, everybody.So I'll turn to Page 31. And all I'd highlight on this slide is you'll see the 3.6% growth in assets under management and advisement during the first quarter, bringing our AUM&A up to $248.5 billion, driven by good investment returns as well as $2.2 billion in net flows. I'd also highlight that, on Wednesday, we released our April results; and you can see that April had AUM&A up to $253.1 billion, another 2% increase driven by record-high April net flows of approximately $600 million as well as continued market performance. At this level, I'd highlight we're about 3.8% above the average asset balance in Q1, so we have some good growth heading into the second quarter when it comes to earnings and momentum.On Page 32, you can see our EBIT and our EBIT margins by quarter. On the right, I'd highlight in the very right column that we had the full impacts of the acquisitions of GLC in Q1 and Greenchip. And the GLC transaction closed on New Year's Eve and delivered us a net $30 billion [ additional managed ] that is at lower weighted average fees, and as a consequence, you can see that the weighted average margin declined during the quarter. You can see in the top right that we've normalized the margin to exclude the impacts of the acquisition, and the margin was 46 basis points on this basis and was in line with last year and was a stable trend.I'd also remind, as you can see in the bottom left, Q1s are seasonally high quarter for expenses, as promotional and processing expenses are higher as a result of the RRSP season. I'd also remind that Q1 has seasonal weakness in revenues, as our fees are expressed as an annual percentage of assets and we only have 90 days of revenue in this quarter.Turning to Page 33, you can see our consolidated statement of earnings; and our $0.85 per share result, up 25% from last year and in line with Q4.I have a few quick points I'll highlight on this slide. First would be a reminder. If you look at the top row there, we've indicated the number of days in the period. As mentioned in the last slide, because [ there were less days ], Q1 has a number of peculiarities that affected various line items. And I'm going to highlight more of that on a coming slide. I would remind that revenues are accrued based upon number of days, so we'll get 90/365th of the annual revenue rate during this quarter. Second, if you look at the first highlight 2 in the middle of the page, you'll see that business development expenses of $79 million are unchanged from last year and down $9 million from Q4. I'd note that this is a bit below our full year guidance due to timing of promotional expenses. I'd also remind that Q4 expenses were elevated by about $10 million due to increased Mackenzie sales compensation at the very end of the year. As indicated last quarter, we reset the bar on this compensation every year. And we raised the bar for 2021, and as a result, the expense is running at much lower levels. I'd also remind that we've given guidance, and you can find it in Page 42, that shows how this line is going to vary based upon sales activity and what you can expect if Mackenzie continues to achieve the type of growth that it's putting on.Third, if you look at the second highlight 2 in the middle of the page, you'll see our consolidated operations and support expenses were up $11.4 million or 5.9%. I'd remind you that this includes $6 million of impacts from the GLC acquisition and also includes $1.5 million in higher pension expense that we disclosed last quarter was coming on. Excluding these 2 items, we're up 2%, which is just a bit better than our full year guidance that we provided. As you can see in, call it, point two on the right, we're keeping our full year expense guidance unchanged. And we've provided that guidance on appendix Slide 43.Moving to Page 34. I have 2 comments on our results by segments and by component. The first, as indicated by James, this is our first quarter reporting [ against the ] net earnings line at the segments and component level. As mentioned to you on our March 11 call, when we released this disclosure, we believe this change better reflects the business performance of the segments and enables the use of P/E and is also intended to encourage a "sum of the parts" approach to value as well as making sure we're positioning the different businesses against appropriate global peer groups.I've also called [ out on point two ] a few noteworthy items. First is a reminder, as mentioned by James, that the Wealthsimple offering and revaluation of our stake is $1.5 billion in value. I'd remind you we're recording this investment as fair value through other comprehensive income, so there's no contribution to our earnings from Wealthsimple. Second, our secondary transaction will close in 2 days, and we'll receive our $295 million in proceeds. And we'll continue to have a $1.2 billion stake in the company. I'd also highlight that China AMC's earnings are up 41% from last year. And we've highlighted here that they declared and we received in April our annual dividend, which was $26.8 million. This dividend doubled from last year as a result of the earnings growth as well as an increased dividend payout rate from 40% to 65%.Looking at the increase in net earnings by segment, I'd highlight the 49% growth in Mackenzie's earnings. And this was up 42% excluding the impact of acquisitions. As you saw in Barry's section, Mackenzie looks poised to continue net selling in retail at a rate of over 10% of assets per year. And there's a lot of operating leverage in this business and we expect continued earnings growth at very healthy levels. At the bottom right, we put a sticker on the value of these investments in strategic investments at $4.2 billion. And this is based on the trading value of Great-West Lifeco shares, our entry-level P/E of 17.5x China Asset Management earnings, our purchase price for Northleaf and the carrying value of $1.5 billion on Wealthsimple and $291 million of excess capital that we hold in [ very safe ] and liquid investments.Turning to Page 35. We've reflected consensus analyst earnings estimates, at the time we went to press, for IGM Financial of $3.81 for 2021. And we've shown the allocation of these earnings estimates by segments and component. Much like we did on March 11, we've taken the share price of $44.75, when we went to press, on this deck; and allocated it to these components by using our $4.2 billion assessment for strategic investments reviewed on the last slide and allocating the residual to IG and Mackenzie proportionate with their earnings. You can see at the bottom we've circled the implied P/E of IG and Mackenzie, which on this basis was 8.4x. And then we've compared this 8.4x to the average multiples of global publicly traded large-cap wealth managers, in the case of IG; and asset managers, in the case of Mackenzie. We've disclosed that these peers are trading on average at multiples of 15x earnings. And we -- obviously we encourage you to look at the strong momentum in IG and Mackenzie's earnings that are being put on right now.Turning to Page 36, just a few quick comments. First, you can see that advisory fee and product and program fee rates are in line with expectations and guidance. I would comment on our asset-based comp because of a peculiarity in how it's paid in the industry. Unlike our revenues, asset-based comp at IG and Mackenzie is paid at 1/12 the annualized rate each month. What this means is that, if someone estimated this compensation by multiplying the annual rate by 90 days over 365 days, they'd understate this expense by about $2.7 million. We present the rate here on both bases as actually paid. You can see the rate increased by about 0.6 basis points. And we would expect the rate to be around 47 basis points for the remainder of the year. The reason for the slight increase in this line was there was a greater proportion of AUAs subject to this compensation, which means there is less cash, less money market fund and less [ interest savings ] accounted in the base, which we don't pay asset-based comp on.On Page 37, you can see IG's income statement with earnings of $110.5 million in the quarter. I'd make 2 comments. First, you can see in other financial planning revenues we had an increase of 15.8% year-over-year, reflecting higher insurance and mortgage volumes, which Damon reviewed with you a few slides earlier. I'd remind you that insurance is seasonal. And our peak sales season is Q4, so we view this year-over-year growth in Q1 as very encouraging. And as Damon mentioned, our comprehensive financial plannings are focused. And we see significant opportunities for further increase in the use of insurance, lending and other banking products with our financial plans.Second, you can see our operations and support expenses were up 2% or $2 million from last year. This is right in line with our guidance of 0.5% growth, plus the $1.5 million per quarter in pension expense that came on due to interest rate increases last -- decreases last year. We've given a footnote at the bottom right just to give you guidance going forward that, as a result of interest rate increases in the quarter, you'll see in our financial statements that the funded status of our pension improved by just over $100 million pretax in the first quarter. I'd let you know that, under the accounting requirements, annual pension expense is set at the beginning of each year based upon the rates prevailing and assumptions prevailing at that point in time, but I would let you know that had the current rates been in effect at January 1, our 2021 pension expense would have declined by $1 million as opposed to increasing by $6.5 million. We point this out, as this is obviously a tailwind for us moving beyond 2021 that you should be aware of.Moving to Page 38. We presented the net asset management fee rates for Mackenzie on the right-hand side. You can see the impacts of the GLC acquisition coming on during the quarter, and the 53 basis points is right in line with expectations and guidance. We've also included the fee rate excluding the impacts of the acquisition at 68.7 basis points. And I'd just highlight the rate was down very slightly in the first quarter for a few of the same reasons discussed in the IG section. First, some dealers still continue to sell DSC. And we had an increase in the payments of sales commissions, and these are expenses incurred. This is a $2 million increase from Q4 and [ is included in this rate ]. Second, as mentioned earlier, the asset-based comp is paid at 1/4 of the annual rate versus 90/365, and this was worth another basis points in decline. So very stable fee rates. And these fee rates are obviously being supported by the strength in retail.On Page 39, you can see Mackenzie income statement. $48 million in net earnings was an increase of 49% from last year and 18% from last quarter. As you look through the percent changes, you'll see the operating leverage in the earnings of the business given the extent of fixed expenses. And the second point, you can see that operations and support expenses increased by 8 -- from -- by $8.8 million from last year. As guided last quarter, $6 million of the increase was the GLC and Greenchip acquisitions. This does include purchase price amortization. Excluding this, the expense was up 3.7%, which is below our full year guidance of 5%. We also mentioned earlier business development expenses of $20 million were at the same level as Q1 of 2020. And I'd remind you that on Page 42, in the appendix, we've given guidance on how this line item will vary based upon different levels of retail sales activity.This concludes my comments. I'll open up to questions.

[Operator]

[Operator Instructions] Our first question comes from Nik Priebe of CIBC Capital Markets.

[Nikolaus Priebe, Research Analyst]

I just wanted to start with a question on investment performance. One of the things that stood out to me was I noticed the proportion of fund assets at Mackenzie ranking above median on a trailing 12-month basis moved from the high-70% range in Q4 to 22% in Q1. I'm just wondering how I should interpret that. Like was that -- would that have been related to a particularly strong period of relative performance in Q1 2020 [ pulling off that DTM ] period? Or how would you attribute that sequential change?

[Barry Sean McInerney, President & CEO of Mackenzie Investments]

Sure. Great question, Nik. And you're right actually -- it's Barry. So just quickly: So the short-term performance -- you're right. Our Q1 2020 was exceptionally strong. And we actually -- with all of our boutiques collectively, we probably perform best at Mackenzie during down markets and choppy markets, which we certainly had in Q1 2020 and into Q2. And so we had historically a high percentage of 4- and 5-star AUM; a double-edged sword obviously because, our AUM, our percentages might go up when the markets are choppy and downwards and therefore consumer confidence is low and therefore flows are low. And then the markets are going one way, as they have been, mostly upwards. We might lag a bit with some of our performance, but overall if you look at our 4, 5 star percentages, [ it's usually ] 40% to 60% in terms of AUM over the long term. So we were at the high end in the first couple of quarters last year. And then we -- again we dropped off at Q1 in 2020. We're down about 49%, 50%, which is actually [ above ] average. I mean it's we're very comfortable with that level.The -- if I may, though. On the long-term number, the percentage of 5 star has actually remained relatively consistent last several quarters. And as you know, the vast majority or a preponderance of our flows are going into our 5-star funds; and into our no-star funds, as I mentioned in my remarks, because we've had success in launching some really attractive new products that have yet to garner a Morningstar star because they're less than 3 years old. And those flows have been very, very strong. There's 5 or 10 of them, easily. The top couple, for instance -- you probably know the global environmental by Greenchip and the -- Bluewater's global balanced. They're both under 3 years old. And they are collectively up to about $2.3 billion in AUM, so obviously when they come onboard with their stars, that -- numbers will go up, but I think you've got it about right. The long term is where we think we are, roughly 46%, at the mid range. The 5 stars have held. The 4 stars have come off a bit, obviously, [ with the math ]. And someone like an Ivy Foreign, a big fund -- but it toggles between 3 and 4 star. It goes up to 4 or 5 star when, again, markets are down because it's a really downside risk protection type of building block. And then they lag a bit when markets are up. So very explainable.Slide 28, if you recall. You see the -- all the boutiques that we have -- these aren't all our boutiques, rather. These are the ones that [ still buys ] Mackenzie mutual funds. We've got probably the most broad array of styles probably of any manager in Canada. And of particular note, on the left, as I mentioned, are value oriented. We can see those numbers where their performance was [ top ] last 6 months; and where it's been lagging, obviously, for quite some time as growth outperformed value. And then you can see our growth oriented -- which are still holding 5 star, amazing, particularly growth and Bluewater, but they have -- their performance, adhering to their style which they have, has come off a bit the last 6 months or so. So we just rotate with advisers. We're starting to have a lot of discussions with advisers on value. Most of these teams are fundamental, but our quantitative team, we can see exceptional short-term performance. They're coming back. So it's really an advantage to the -- to our model, a multi boutique. We're able to rotate different styles, but really it's important that I stress this, that our wholesalers partner with advisers to help them build more enduring portfolios with building blocks and not pushing a hot product. We think all of these value, growth, quant, fundamental, emerging market, domestic [ all ] play a really strong role collectively in the portfolio. I hope that answers your question.

[Nikolaus Priebe, Research Analyst]

Yes, no, that's helpful, very thorough. And then just switching gears: On the Wealthsimple financing round, Luke, I think you had alluded to the fact that the proceeds from the secondary offering you participated in will give you greater financial flexibility, but are they earmarked for anything specific? Or are you comfortable holding a greater level of excess capital on balance sheet until you can find a suitable redeployment opportunity?

[Luke Gould, Executive VP & CFO]

[indiscernible].

[James O'Sullivan, President, CEO & Director]

[ I'll start ]. It's James. They're not earmarked for anything specific at this point. Nik, M&A is clearly a possibility, as are share buybacks. And as we've said previously on M&A, we're attracted both to wealth management and to asset management. We like wealth management because of its stability, the resiliency of the earnings profile. And any interest we had there would be -- that would be Canadian-based and it would be skewed to high net worth. On the Asset Management side, Barry has spoken regularly about his 5 growth levers, China alts, retirement, ETFs, SRI. Those are areas of potential interest. And on share buybacks, what I'd say is we view it as it's an important tool. If it's done properly, it can a driver of EPS and a driver of ROE. And if we wanted to, we could file a normal-course issuer bid pretty quickly. So we don't have specific plans at this time, but we have a fair bit of financial capacity, and I think that's important to point out, between unallocated capital which is pushing $300 million before the secondary, the Wealthsimple proceeds, senior debt capacity and potentially other stakes that could be -- that we have that could be monetized. I think we've got a fair bit of dry powder and a lot of optionality in a market that is -- and an economy that is reflating.

[Operator]

Our next question comes from Gary Ho of Desjardins Capital Markets.

[Gary Ho, Analyst]

First question. Barry, I just want to go back to Nik's question on the performance. And you mentioned the shift from growth to value. If that plays out, are you able to capture that churn? Just noticed on Slide 28 the performance of your growth funds are quite a bit better than the value. And do advisers look at the 6 months more, or more on the 3-year numbers?

[Barry Sean McInerney, President & CEO of Mackenzie Investments]

Great question, yes. So the way we present this with advisers -- and more and more, we're having some, I think, very thoughtful discussions with them in that when you're -- again, building a portfolio, a well-diversified portfolio, really should have a role of both value and growth. Now as I've mentioned in prior calls, in Canada we don't have style-specific universes. United States has style-specific universes, so you have a value universe, a growth universe, a core universe. In Canada it's sometimes difficult to put value in a portfolio when it's underperformed for 10 years because, you're right, the -- all the value managers are usually 1 star. So because it's the style has been so pronouncedly strong growth versus value, except of course last 6 months, but we've got -- we've been signaling this for a couple of years now and to point to the fact that -- to take some gains off the table, to rotate a bit back to value to have a more diversified portfolio. It has been resonating. So I think it's been an educational process for the last couple of years. And it might take another couple of quarters, but yes, to answer your question: We think we will benefit. There's not -- by the way, there's not very many value managers left. It's unfortunate. I've been through this for 25 years now. When I was in the United States and the high-tech boom of the late '90s, where value was dead, as they were declaring, which -- it's never dead. It's a wonderful style. It offsets growth very well. Value is a little different nowadays than it was 20 years ago, but I think that there's a lot of interest. In discussions we've had, we're having right now with [ advisers and the wholesalers, they say ], listen -- they are listing the fact that they should rotate and put some more into value and have a nice balance between value and growth.And we would actually -- we believe we're well positioned. We have 2 very good value managers in our Cundill and our North American equities side. Not many, as I said, of the value managers left. Ours are good, very good, stick to their style. And you should start to see some flows coming into the value side in Canada in short order. So we'll see, but we're -- that's again our portfolio construction-led sales process. "Here is your well-diversified portfolio. Here is how you put these building blocks together." And there's good discussions going on right now. I think you're right. You'll see some value flows come forward shortly. You can see, for instance, that redemptions have really stopped. There's no redemptions right now in value. It's just more of a sales issue with Cundill and North American equities. And we think this is going to pop relatively soon. Thank you.

[Gary Ho, Analyst]

Got it, great. And then second question, maybe for James. Just when I look at Slide 34, one of the bigger discrepancies in carrying value and fair value is your China AMC assets. We've seen the monetization of Personal Capital, Wealthsimple last week. What alternatives are you looking at on the China AMC side?

[James O'Sullivan, President, CEO & Director]

Sure. Well, that's an investment we're proud of. That investment reflects, to be frank, 50 years of relationship building in China. And we very much view China AMC as a best-in-class asset. It's a -- I think it's a clear leader in their field. And so when you bear in mind that China represents the second largest equity market globally, the second largest bond market, I think Canadians are going to want exposure as part of a globally diversified portfolio that satisfies their retirement needs. So for all of those reasons, we like the asset. And we would in the fullness of time consider more if that opportunity presented itself.

[Gary Ho, Analyst]

Okay. And then my last question, perhaps for Luke. On Slide 42, where you gave us the sensitivity of business development expense relative to Mackenzie's gross sales, just curious, your crystal ball, especially on the right bar charts there. What are you accruing for given strong sales? And how should we think about this number for the balance of the year?

[Luke Gould, Executive VP & CFO]

Great question. And if we continue putting this growth, there's going to be some variability from Q1's level. And so we'll be assessing each quarter. If you look at what's been put on -- and we've got April. We've now got a few days in May. We're heading to the right-hand side of Page 42 there with -- it's certainly in our sights that full year retail net sales could be $5 billion or even beyond that as we continue to work through the year. And this durability is what you should expect.

[Gary Ho, Analyst]

And how should we think about your accruing for that? Are you -- I guess, for Q1, are you accruing more on the left-hand side? And then as the year progresses, you'll see the numbers. And then you'll move more to the -- like it's -- is it going to be more kind of back-end weighted?

[Luke Gould, Executive VP & CFO]

Great question. For Q1, you can think of our accrual being at about the $2.5 billion mark. And as we continue to get closer towards the $5 billion or beyond, we'll be assessing every quarter, but what I wouldn't expect is something like the surprise we had in Q4 of 2020, where truly it was just remarkable in November and December and we had to make a significant accrual to reflect the increased sales being put on. This year is just stable, steady growth. We'll be assessing each quarter, and it should be pretty predictable this year.

[Gary Ho, Analyst]

That's helpful. I was looking for that $2.5 billion number. Okay.

[Operator]

Our next question comes from Tom MacKinnon of BMO Capital.

[Tom MacKinnon, MD & Analyst]

James, you said in your opening remarks that you were thrilled with the growth that you saw at Wealthsimple, so I guess the question is, if you're thrilled with something, why do you sell it? And then if the answer is, well, that gives us flexibility to invest in distribution capabilities, then why not look to Wealthsimple? It's had great growth in AUA. So maybe you can share with us what your thinking there was in terms of why you sold down on an investment that you are thrilled with.

[James O'Sullivan, President, CEO & Director]

Well, we certainly are thrilled with it. And I think anyone in our position would be thrilled to have the holding in that company that we do, Tom. Look at the growth in AUA. Look at the growth in clients. I mean they have proven to be a remarkably nimble, remarkably agile, open minded about how to compete digitally in financial services in Canada. And they've -- I think they've just achieved an unprecedented level of success for a company of their type in this country. So that's the basis of being thrilled. And of course, the mark on our balance sheet is, I suppose, the ultimate reason to be thrilled because what was a $187 million investment is now marked, prior to the secondary, to $1.45 billion. Look. As -- so -- but you asked a good question. If you're thrilled, why sell? And my answer would be prudence. I -- it just struck us as prudent to take some money off the table. I spoke earlier to my view that the world is reflating, that there is a high degree of confidence in boardrooms across this country and, frankly, across North America. And I think we could be in for a period here where there is a very, very significant level of M&A opportunity in Wealth Management and in Asset Management. And so the proceeds of that sale after tax, $260 million, we add those to our unallocated capital and our senior debt capacity. And as I said, we -- this gives us dry powder. And it's going to give us -- I don't worry about our ability to deploy capital. I think, if our thesis is right, there is going to be an opportunity to deploy this and do some great things for our shareholders.So we're deeply proud of Wealthsimple. We've taken a little bit of money off the table. We continue to be the largest shareholder. It continues to be controlled by the group. And that overall, Tom, just struck us as kind of the right balance, but yes, we're thrilled. And we love it.

[Tom MacKinnon, MD & Analyst]

To what extent is it a -- has it been -- what do you get out of owning it? Is it just strictly a strategic investment? Or it's never really been integrated into your platform. I mean, is it just -- do you just listen to secrets as a result of being on the Board? And what is -- where does this -- where does Wealthsimple fit long term? I mean, is it just nothing more than a strategic investment? Will it ever be integrated any -- to any extent?

[James O'Sullivan, President, CEO & Director]

Yes, it's a good question. I'll tell you how I think of it, Tom. I think about solving for the problem of incumbency. I think about our management team; and being very, very busy day in, day out, focused on the business at hand. What Wealthsimple has done, what Portag3 has done, what our fintech relationships generally have done is really helped our management team not just focus on the business at hand but focus further out to horizon #1, focus further out still to horizon #2. It gives them relationships in the fintech community. It gives them dialogue in the fintech community. It's created very real partnership opportunities with some of these investee companies. And as I said, the problem of incumbency is a very real one. And that is why do large, older companies not see what's coming at them. And the best way I think to solve for incumbency is to make sure that you have something like what we have, which keeps our management team very much kind of current and very much on their front feet as they look at how the industry is going to evolve.So that kind of solving for the problem of incumbency is one of the things I like most about it, but there's also a lot of business done. I mean we are a major investor in Conquest financial planning, and we're rapidly rolling that out across IG wealth. We've had numerous conversations with KOHO. Barry has done a significant amount of business with -- in the past with Wealthsimple. And I'll let him speak to that in a moment, but it is I really view this exposure to fintech as really important in just making sure that IGM is on its front feet and competitive. Barry, do you want to add some thoughts?

[Barry Sean McInerney, President & CEO of Mackenzie Investments]

If I could, James. Thanks. Just to amplify your first point. And I'll speak on the Asset Management side, second. On the first point, you're right. I think we've always viewed Wealthsimple also is attracting investors into the wealth ecosystem earlier. I mean you've seen hundreds of thousands of new clients of Wealthsimple come into the -- arguably the wealth ecosystem in Canada much earlier than they would or coming in at all. Because you wouldn't see the millennials pick those in their 20s. They come in and start to save. It's wonderful that they're starting to save every month. And then that's we don't know the journey they take at some point. They might need an adviser once they hit a certain point in their career or certain point in life, so we think that that's always an advantage. On the Asset Management side, as James pointed out, we -- Mackenzie, as you know, we've got our ETF, very proud of our ETF franchise. It's hitting $10 billion probably next week. So it's growing very, very fast. And so we've been increasingly working with Wealthsimple with -- and they -- to design ETFs that they need that we can manufacture for them. So there's really growing synergy, even within IGM, between Wealthsimple and Mackenzie that we're quite excited about actually because, as you know, the -- a lot of their new businesses within Wealthsimple are growing very fast, but that core financial -- or the technology platform is also growing 15%-plus a year. And so that's another connection point, Tom, between IGM and -- within Wealthsimple and Mackenzie that you should see some future growth going forward.

[Operator]

Our next question comes from Geoff Kwan of RBC Capital Markets.

[Geoffrey Kwan, Analyst]

My first question was maybe just tagging on some of these questions around the fintech investments and just was curious. I know that you mentioned stuff like KOHO and Conquest, but within the Portag3 private equity fund, are there other investments that you find really interesting, whether or not it's potentially very significant financial return type opportunity or also just ones that may eventually become an attractive entity that you would partner with and incorporate into somewhere within the IGM business?

[Luke Gould, Executive VP & CFO]

[ And so I think that ]...

[Barry Sean McInerney, President & CEO of Mackenzie Investments]

Geoff, yes -- sorry. Go ahead, Luke.

[Luke Gould, Executive VP & CFO]

Well, yes. I'd say that there's a variety. And I think most of them right now are playing on James's theme of incumbency. It's those places where you've got a management team who's energized and focused on a space that's really synergistic to the rest of what happens in IGM. So there's a few of those on the mortgage side of our business and elsewhere that we find very exciting. There's nothing that's at the level of Wealthsimple right now, where this is a true success and something that's just got this clear momentum, but I'd say broadly we're quite excited about the Portag3 ecosystem. We have just been a lead investor in fund 3. And as James says, that ecosystem opens a lot of doors for us to sit at tables we wouldn't otherwise be at and to leverage management teams that are top of their game and really bring capabilities to IGM that we wouldn't otherwise have.

[Geoffrey Kwan, Analyst]

Okay. And just the other question I had, which is a bit more of just bigger picture, was with respect to advisers in Canada and kind of the approach to managing client money. Is there anything that you would say has kind of changed in the past decade or 2 with respect to the types of investment projects they're choosing for their clients? Have -- things like having 2 major market downturns in, I guess, a little over a decade, whether or not it's the regulatory changes that we've seen kind of getting rolled out over the past decade. Has that changed how they manage money? Any implications for what that means for IG wealth and Mackenzie?

[Damon Murchison, President & CEO of IG Wealth Management]

Yes. It's Damon. I'll start this, and I'm sure Barry will have some views, but I would say that, on the whole, advisers and how they view portfolio construction have changed simply because the amount of risk that you need to assume now to achieve the same type of return has tripled over the last 20, 25 years. And it's forced advisers to really look at really their strategic asset allocation, first; and making sure that they have the right setup, they have the right asset classes involved in their portfolio construction and then that they have them at the right percentages based off of what the client wants to achieve. So from an IG perspective, that's forced us rightfully so. And I mentioned iProfile during my presentation. So to really look and make sure that strategically we have an asset allocation that makes sense and that we do look at all the opportunities out there. There are far more tools available to us than there were 10, 20 years ago. And it's incumbent on us looking at public, private, cap bias. You talk about value growth. You can go on and on and on about the opportunities out there.So that's why we really employ a model solution or a managed solution type of approach at IG. We take that off the hands of our advisers because that's something that we are good at. And we allow them to really focus on the relationship and making sure that -- not only are they offering the best risk-adjusted returns for their clients, but they have enough time to really focus on the aspects of financial planning. And investments are only 1 of the 6 aspects of financial planning.

[Barry Sean McInerney, President & CEO of Mackenzie Investments]

If I could add. I -- Damon is spot on, Geoff. Going forward, the advisers, to Damon's point, there are more and more tools in the tool kit that they can now access and they have to access. And it's -- it points to this whole democratization of these types of investment strategies that were solely the domain of the sophisticated institutional investors now -- that are now coming to the adviser and investors, which is really exciting but actually necessary too because, again with low interest rate environment going forward, perhaps more muted equity -- public equity returns going forward, you need more in the tool kit to put in that portfolio and to get the risk-adjusted returns they need. And as Damon was saying, I mean, you see liquid alts right now in Canada, approved 3 years ago. Now the private alts are coming, like us, for instance, with our [ OMs, wrappers ], with Northleaf. James mentioned China. China, the equity and fixed income markets weren't really accessible by Canadian investors even a couple of years ago. Now they are. We ourselves at Mackenzie has -- we already filed or launching a Chinese fixed income mutual fund in June or July to complement our fast-growing equity -- Chinese equity mutual fund.So it's really take a look at your traditional equity portfolio and extend it into areas such as China and/or privates. Extend your fixed income into, again, other types of -- [ EMD and ] Chinese fixed income and private credit now. Extend, James's point, reflation or inflationary, not that we're going to time that, but put some building blocks in there like infrastructure and [ REITS and ] gold and precious metals that are natural inflation hedges. It's a real rethinking of the portfolio construction that we're fortunate enough to help Damon and IG, Mackenzie to do some of that for them. And that IG iProfile is just an institutional-quality product that's forward looking as to what advisers need going forward. And that's exactly what we're seeing more and more with Mackenzie and our discussions with advisers. So thank you.

[Operator]

Our next question comes from Graham Ryding of TD Securities.

[Graham Ryding, Research Analyst of Financial Services]

I just wanted to touch on the operating leverage this quarter and the lack thereof. Just nice lift in revenue quarter-over-quarter, but essentially the expense growth fully offset. Should we be not interpreting this quarter as sort of indicative of the operating leverage within IGM? And is this -- big picture, was there some seasonality at play this quarter?

[Luke Gould, Executive VP & CFO]

Thanks, Graham. It's Luke. I'll take that one. So we view there as being a tremendous operating leverage. The best comparison is to Q1 of last year. Earnings were up 26%, consolidated. And at the component level, they're very strong as well. I would highlight that there is seasonality and significant seasonality in our business, in our expenses in particular. Because it's RSP season, we've got amplified promotional and processing expenses every Q1, so any comparison to Q4 is not going to be appropriate in the first quarter because of that seasonality. And we view there as being so much operating leverage. And that's what's led to Mackenzie's earnings being up by over 40 from last year, when you exclude the acquisitions, as well as strong growth at IG. And that's what you should expect from these businesses going forward. There is a lot of fixed costs. We've given guidance for the full year and, yes, [ up year-over-year. There's ] going to be tons of operating leverage going forward. And yes, Q1 is an odd one not only because of amplified expenses but because we have fewer days in the quarter. And so I talked about the peculiarity between asset-based comp which is 1/4 of an annualized rate relative to our revenues that are 90/365th of an annualized rate. So there's 2 seasonal headwinds, but yes, we're so proud of the operating leverage we've put on and we're still excited about the future.

[Graham Ryding, Research Analyst of Financial Services]

Okay, understood. Jumping to Northleaf: The contribution from Northleaf was lighter than expected, from my perspective. Just is this quarter indicative of what we should expect from that asset? Or was there something sort of weighing on, I think it was, just under $1 million...

[Luke Gould, Executive VP & CFO]

You're on a really good point. So it's Luke again. The earnings were a bit light for Northleaf on 2 fronts. One, the commitments, the new business being put on is very strong. You saw Barry refer to the $1.5 billion in new commitments in the quarter. That's $1.5 billion on a base of $15 billion in AUM, so you can think of that as 10% growth in their business in the quarter alone. The way they earn their money, though, is most of it generates management fees when the money is invested. And right now at this time, they've been slower at putting the money to work than expected given the market that we're in and where some of the valuations are at. So that did create a lag in revenue that will be put on as the commitments get put to work. And there was also an accounting true-up of about $1 million that hampered them. That was just, again, a true-up in the results. So I -- we're sticking consistent with our guidance for the full year of $10 million from Northleaf. And I suggest, given the growth they're putting on, this is going to be a very high-growth business for us going forward.

[Graham Ryding, Research Analyst of Financial Services]

Okay, that's helpful. And the $1.5 billion raised, was IGM part of that commitment at all? Or was this all third-party AUM?

[Luke Gould, Executive VP & CFO]

It was substantially third parties. And you can think of that $1.5 billion being about $1 billion private equity, none of which would have come from IGM; and $250 million to each of infrastructure and private credit. And so we've made active commitments at IGM and Mackenzie, but that's just starting and will come on over time.

[Graham Ryding, Research Analyst of Financial Services]

Okay, understood. And then just my last question: This is a follow-on, but you talked about Wealthsimple. And there are some, I guess, Mackenzie ETFs within that distribution channel. Is there anything you can quantify there? Like how material is Wealthsimple as a distribution channel for Mackenzie ETFs?

[Barry Sean McInerney, President & CEO of Mackenzie Investments]

It's Barry again. The -- so what we -- our partnership between Mackenzie and Wealthsimple actually has helped -- in the past has helped them to build Wealthsimple-branded ETFs. And so there are 2 ESG ETFs Wealthsimple branded; have been very, very successful in that channel given, you can imagine, with the demographics being mostly millennials. So I believe that's at least over $0.5 billion, if not more, between those 2 ETFs, like more $600 million or $700 million. And then they're launching a Shariah-compliant ETF, Wealthsimple, that we manufactured for them. So the discussions are going on with them to combination -- principally it's been early days us helping them manufacture Wealthsimple-branded ETFs, which essentially as -- the manager at the back office are really Mackenzie, but we brand them Wealthsimple for them. But also ongoing discussions with them, also with some of our new ETF launches at Mackenzie, to use Mackenzie ETFs in their portfolio. So it's a combination of both. And we're actually quite excited by that distribution channel with Wealthsimple between the -- for the Mackenzie ETFs.

[Operator]

Our next question comes from Scott Chan of Canaccord Genuity.

[Scott Chan]

Maybe sticking on that ESG or sustainable theme. On the retail side, we've obviously seen robust growth [ and into the quarter, into Q1 ]. Barry, is there an opportunity to expand that theme into the institutional channel? I know that obviously that's been very hot as well. And to my understanding, I don't think Greenchip or, I guess, Mackenzie has any institutional assets within that sustainability [ fund ].

[Barry Sean McInerney, President & CEO of Mackenzie Investments]

Great question. Absolutely. As you know, the interest and the application of ESG actually began in the institutional marketplace, and now it's coming very strongly to the retail marketplace here in Canada as well as the United States, as we anticipated. And it's coming very, very strongly. I'd like to speak to that in a moment. Now institutional side, though, yes. So we've been -- Greenchip, we onboarded, and they're safely at home at Mackenzie's boutique. And we've been actively now bringing them through our institutional sales opportunities in Canada, U.S. and Europe; and in -- actually in China, surprisingly, where ESG is really taking off. And we have a strong interest in all of those regions for Greenchip's environmental equity -- global environmental equity product and strategy. And you'll probably hear from us shortly in terms of some of the early successes, but we've been very, very pleased. That's a real huge door opener, when you go to these institutional consultants and directly to these large pension plans or sovereign wealth funds, to say we have a world-class environmental equity 14-year history, a successful history, in terms of performance. And so that's been building very nicely, and that's why I was mentioning the institutional wins. They're lumpy. They come in -- if you'll all recall: Last April 2020, when retail was a little bumpy in Canada, we brought in over $2.5 billion onboarded institutional wins. Since then, it's been a little slow, but that pipeline is back up again. And the 2 leaders for us in the pipeline are Greenchip's environmental equity product; as well as actually our emerging market product quant team, which has outperformed the index for last year over 1,000 basis points. So we're -- we lean in where we need to. And there's been really strong interest there.If I -- now that you've asked [ what's sustainability ]. This is really a game changer for the industry in Canada, another game changer. There is remarkable interest in sustainability. As we know, capital redeployed in this area, tens of trillions of dollars over coming decades. And so we've got the -- we launched the Greenchip balanced. We launched sustainable bond fund. We have -- that's the first [ balanced environmental themes ]. And as I mentioned in my comments, we hired one of the pioneers of ESGs investing in Canada, Andrew Simpson. And you'll see his team and products being launched over the next couple of quarters. So collectively we're working real hard in that area. It's important to us as a business. It's important for the climate in the world that we get this right, and so we're really embracing this hard and get in front of it as I think we did a couple years ago for the advisers and we want to continue to be in front of that.

[Scott Chan]

And maybe just on GLC that recently closed. Is there any notable updates with that transaction since you closed it?

[Barry Sean McInerney, President & CEO of Mackenzie Investments]

Great question. So yes, early days but really -- continue to be really excited and pleased; first of all, super teams that we brought in, in terms of adding to our investment talents across a lot of our boutiques. And then as I mentioned, standing up a separate -- large separate equity boutique that has institutional quality. And early days. We're having good discussions of -- Canadian institutional investors with that boutique. And then of course, probably the other 2 principal advantages of the GLC asset management acquisition, a, was the fact that we Mackenzie now are gainfully working closer with Canada Life's wealth business in Canada, which is growing very nicely that we can again look for ways that we can grow that with new ideas and products. That -- so those -- that is early days, going very well in terms of the dialogue and the planning.And then the group retirement marketplace, which is a growing marketplace in Canada, as we know. And we -- Mackenzie had de minimis exposure there prior to GLC, and now I would say that the reception has been very positive. Institutional consultants are the intermediaries for a lot of those clients, but they've been fine with the transaction. And a little bit of a wait and see for a couple of quarters, but that's gone very well. And we probably should be proactive in that channel over the coming quarters once everything has been settled down in terms of the changes to the organization that the investment consultants saw and now they're fine with it. So all green lights right now for us to get going on those 2 new channels. And again very happy with the teams coming in and the new investment professionals, just a terrific team. And they fit very nicely culturally into Mackenzie.

[Operator]

[Operator Instructions] Our next question comes from Jaeme Gloyn of National Bank Financial.

[Jaeme Gloyn, Analyst]

My question is on the high net worth segment and mass affluent segment and the disclosures around the iProfile managed solutions. It looks like really solid performance there. Is there anything you can tell us about the growth in that iProfile solutions product? What's the uptake from high-net-worth and mass affluent clients in terms of the gross sales that they're generating? And what are you expecting out of this product going forward?

[Damon Murchison, President & CEO of IG Wealth Management]

Yes. So the growth -- it's Damon, by the way. The growth in the iProfile products has been substantial over the last 3 -- or 4 years. Our approach at IG is to really embrace well-constructed managed solutions. So we have -- over 80% of our flows are directed there. We foresee that continuing. And for the mass affluent and high net worth segment, iProfile which -- is really a makeup of 3 different types of solutions. There's the iProfile pools. There's the iProfile portfolios, and then there's new discretionary iProfile models. So the most money is in the pools, well over $20 billion. The portfolio started last year and we just -- we're approaching $2 billion in those. And then the discretionary model portfolios, as I said, just started. So we expect that to continue to grow. We fully have made sure that we've designed these things to be very receptive to those types of markets that we want to make sure that we grow our percentages in.

[Jaeme Gloyn, Analyst]

Great. And is it new clients coming to the IG platform that are driving that growth? Or is it existing clients shifting some of their money from other [ fund and onto the ] iProfile?

[Damon Murchison, President & CEO of IG Wealth Management]

It's actually both. So we've done a great job of working with our existing clients and making sure that they're aware of the benefits of leveraging iProfile. And we've -- it's one of the reasons why we've got -- we're very excited about our increasing share of wallet with our existing clients, but it's also been a huge driver of our ability to bring in new clients to the organization. So both share of wallet and new client acquisition have been key for us, and they will continue to be key for us going forward. And then it's helped us bring in new advisers, advisers that are experienced in the industry that want to focus on financial planning and want to rely on well-constructed managed solutions, to join our firm as well.

[Jaeme Gloyn, Analyst]

Okay, that's great. Shifting to the comments around China and the attractiveness there and recycling some of the capital from Wealthsimple. Is the view right now that the most attractive option is the one you have with China AMC? Or are there other opportunities in China that could -- we could see that capital get recycled and deployed into?

[James O'Sullivan, President, CEO & Director]

Yes. I would -- I appreciate the question, but I would say we have not landed on what the optimal deployment of this dry powder is. Both -- I mean China AMC, as I said, is an asset we kind of very much like and would be open minded to owning more of, but I think -- as I said earlier, I think, as the world reflates and confidence in boardrooms builds and builds, we're going to see a very active M&A environment generally. And I expect a lot of wealth platforms and asset management platforms to potentially become available. So I'm -- we are very open minded as to how this capital will get deployed.

[Jaeme Gloyn, Analyst]

Okay, great. And then last one, just maybe more of a macro view. Industry as a whole is obviously doing very well from a net flow perspective. And I think there are some underlying macro currents that are helping to drive that, but what are your overall views on the sustainability of this -- of record industry net flows at least over the near term?

[Barry Sean McInerney, President & CEO of Mackenzie Investments]

It's Barry. Great question. So certainly we're seeing record flows in the industry. And that's a good thing, obviously, for all of us and particularly IGM as we gain market share. It is we think this can go on for a little while now. I mean this can't go on forever, as trees can't grow to the sky, as they say, but if you see the -- to your point, the macro forces, first off, interest rates -- all the central banks are signaling, particularly in Canada and the United States and Europe and elsewhere, interest rates will be low for quite a while, at least for a couple of years. And the central banks, as we know, are really focused on that economic recovery and jobs and employment, probably more so than they ever have. And so they're going to be a little more accommodative -- or patient, rather, to raising rates until they see those signals come back. And even -- to James's point, even reflation. As you know, the central banks have changed their posture on inflation, not so much a target but more of an average. And so as -- if inflation does kick up transitory-wise above those targets, they'll again be patient with it because -- just to ensure that recovery is there and the jobs there. So interest rates remaining low.The equity markets, of course, have been kind of bolstered by macro forces with fiscal stimulus, but also obviously is a broader array of companies that are thriving in this environment. Some industries are still not, and that's unfortunate and as some folks are so disadvantaged with this COVID environment. But increasing amount of companies are thriving. And so the corporate earnings, as you've probably seen, coming in are strong. And there's no reason why -- and you've seen some of the large financial institutions in Canada and United States point to the fact that this might go on for a few years going forward. So when you have that environment, plus obviously the average citizen being a little more careful with their spending and therefore that money going into savings, that is a favorable environment for wealth and asset management industries. And so I mean we're not going to put up a point of prediction as to when that might subside, but it's not a 1-quarter phenomenon. This could go on for quite some time, so we're here very focused, all of us, just to take advantage of it, gain market share in a growing market. That's a nice combination. But first and foremost, obviously just focused on providing great advice and great returns for our clients. But a great question. I don't have a crystal ball, but it's certainly a robust environment now for the industry.

[Operator]

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Potter for any closing remarks.

[Keith Potter, Head of Investor Relations & Treasurer]

Yes. Thank you, everyone, for joining the call today. We certainly appreciate the broad set of engaging questions.And with that, I hope you all have a good weekend. And we'll end the call. Thank you.

[Operator]

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.