IGM Financial Inc

TSX:IGM

Earnings Call Transcript 2024-Q1

[Operator]

Thank you for standing by. This is the conference operator. Welcome to the IGM Financial First Quarter 2024 Analyst Call and Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions]

I would now like to turn the conference over to Kyle Martens, Treasurer and Head of Investor Relations. Please go ahead, sir.

[Kyle Martens, executive]

Thank you, Karl. Good morning, everyone, and welcome to IGM Financial's 2024 first quarter earnings call.

Joining me on the call today, we have James O'Sullivan, President and CEO, IGM Financial; Damon Murchison, President and CEO of IG Wealth Management; Luke Gould, President and CEO; Mackenzie Investments; and Keith Potter, 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. Slide 4 and 5 summarize non-IFRS financial measures and other financial measures used in this material. And on Slide 6, we provide a list of documents that are available on our website related to IGM's first quarter results.

I'll turn it over to James.

[James O'Sullivan, executive]

All right. Good morning, everyone, and thank you, Kyle.

Turning to Slide 8. We delivered a record high first quarter adjusted EPS of $0.94, up 8% year-over-year, driven in part by strong asset growth during the past 12 months. AUM&A including our proportionate share of strategic investments reached $422 billion at the end of the first quarter. This is up 21% relative to the same time last year.

Both our Wealth and Asset Management segments contributed to asset growth, with each and every company increasing their AUM&A over the past year. I'd remind you that our reported Q1 2024 net outflows of $128 million exclude our strategic investments, each of which experienced positive net flows during the quarter.

We spoke to our approach to capital allocation during our Investor Day and our previous earnings call. Our #1 priority continues to be investing to position our core businesses for continued long-term success and growth. Our current strong dividend continues to be very important to us, and we know attractive to our shareholders.

And we have addressed our approach to share buybacks, where we will seek to offset dilution where applicable and opportunistically repurchase additional shares in consideration of other capital allocation priorities.

During the first quarter, we began acquiring shares under our NCIB at an attractive price. We returned $146 million of capital to shareholders during the quarter, including $12 million through share repurchases. We continue to be very well positioned financially with reasonable leverage and over $400 million in unallocated capital on the balance sheet as of March 31.

We remained in the market repurchasing shares through the month of April, buying an additional 440,000 IGM shares for $15 million. Finally, IGM continues to be recognized as a top employer. In addition to being recognized as a top 100 employer in Canada by Mediacorp, during the first quarter, we received further recognition as one of Canada's greenest employers, a top diversity employer and a top employer in the province of Manitoba.

Our collective achievements and progress across IGM Financial are fueled by our diverse and highly engaged teams. We've invested considerable time and effort into shaping a leading and deeply rewarding experience for our employees and are proud to see this continue to be recognized.

Shifting to the current environment for our businesses, starting with recent financial market conditions on Slide 9. Even after factoring in a softer April and we've seen strong growth in equity markets year-to-date across all major economies around the world, adding to the roughly 10% average return achieved for our clients in 2023.

Looking at the Canadian fund industry on Slide 10. The first quarter's industry net flows were effectively 0 with net flows into income-oriented solutions and alternatives offset by outflows elsewhere. While high interest rates and inflation continue to weigh on Canadians, we are seeing strength in a number of areas, including an extended period where being invested in the financial markets has been well rewarded, supporting investor confidence levels over the long-term.

A demonstrated ability at IG Wealth to attract high net worth and mass affluent client relationships through a wide range of business cycles. At Mackenzie, we see strength in distribution relationships with wealth management partners, including PFSL and Wealthsimple.

And finally, there has been significant growth across our strategic investments that are each positioned to take advantage of attractive secular trends in the Wealth and Asset Management industries.

Slide 11 outlines IGM's consolidated average AUM&A and the record high Q1 adjusted EPS.

And on Slide 12, we show the strong growth in net earnings at our Wealth and Asset Management segments, up 7% and 12%, respectively. Keith will speak to this in more detail later in the call, but I'd like to highlight here that the increase in earnings power has been supported by very strong asset growth over the past year.

Turning to Slide 13, where we show double-digit AUM&A growth over the past 12 months at almost all of the businesses, including IG Wealth Management, which Damon will speak to next along with the Wealth Management segment as a whole.

And so I'll pass it over to Damon.

[Damon Murchison, executive]

Thank you, James, and good morning, everyone. Turning to Slide 15 and Wealth Management's first quarter highlights, including IG Wealth, Rockefeller and Wealthsimple.

IG Wealth ended the quarter with AUA of $128 billion, up a solid 10% relative to last year and up 5.6% during the quarter driven by financial markets. Gross inflows of $3.7 billion represented another strong quarter and our second best first quarter gross inflows in our history.

Net inflows were $223 million during the first quarter, this excludes $177 million outflow related to the IG defined benefit pension plan, which was transferred in January to an SMA account at Mackenzie.

IG's gross outflows as a percentage of average AUA over the last 12 months remained well below the industry and ended the quarter at 11%, while the industry redemption rate was closer to 16%, both rates remained largely unchanged versus Q4.

Client acquisition during Q1 was a continued strength with new million-dollar growth inflows representing approximately 28% of total new client growth inflows.

On a later slide, I'll highlight the growing strength in our insurance business and touch on how we expect to further digitalize this business going forward. I'll also make some comments on our #1 share of voice ranking in the Canadian wealth marketplace during the call. Lastly, I'll provide an update on Rockefeller and Wealthsimple, both of whom continue to execute well on their respective growth strategy.

Turning to Slide 16. You can see IG's Q1 flows. Our growth inflows continue to remain strong. Eight of the last 10 quarters, we've seen gross inflows in excess of $3 billion, and we remained above the $3 billion mark during the first quarter for each of the last 5 years.

Outflows continue to be partial in nature as Canadians continue to pay down debt and fund their lifestyles through a difficult economic environment marked by elevated inflation and interest rates.

Similar to the last 3 quarters, this remains an industry trend. As our advisers work with their clients and navigate the current economic environment, we are confident that our clients will be better positioned to save and build their wealth when rates begin to fall and normalize.

Turning to Slide 17. I'll make a few points here. Near the top left, we've excluded the transfer from the IG pension -- the defined benefit pension plan from the gross outflows during the quarter. To the right, the outflows rate, you can see our IGM solution as a percentage of total AUA continues to remain strong.

We continue to see an opportunity with our client cash, GIC and HISA, including dollar average costing back into the markets over time. Lastly, our investment performance continued to deliver strong relative performance, with 65% of our assets ranked 4 and 5-star by Morningstar, up from 59% last quarter and 93% of our investment solutions ranked 3 stars or higher.

Turning to Slide 18. Our value proposition continues to resonate, and we continue to see strong new client acquisition, particularly with mass affluent and high-net-worth clients. During the first quarter, we had $445 million in gross inflows from newly acquired mass-affluent clients between $250,000 and $1 million, representing 45% of our gross inflows from newly acquired clients.

While we had $273 million in gross inflows from newly acquired clients over $1 million, representing approximately 28% of our gross inflows from newly acquired clients during the quarter. This is a significant increase from 15% where we were in Q1 of 2018. The first quarter was our second highest quarter on record in gross inflows from newly acquired clients over $1 million.

Put together, mass affluent and high-net-worth gross inflows of new acquired clients represented 73% of gross inflows from newly acquired clients in Q1, up from 56% in Q1 of 2018. As we continue to execute our strategy, we fully expect these percentages to increase over time.

Turning to Slide 19. This shows the productivity of our advisers an increasingly important metric. We continue to see strong productivity as we execute against our segmented advice model and invest in further digitalizing of our business. We expect this to see this continuation trend over time.

Turning to Slide 20. I want to take a moment to speak about the progress in our insurance business. The insurance business has been growing steadily and during the first quarter, we recorded our best Q1 first-year commission since 2017. It was also our highest average case size ever in a quarter as measured by first year commissions.

As you know, first year commissions are a key indicator of the health of an insurance business. Over the last 5 years, we've seen our first year commissions grow by 36%. The increase in average case size reflects our success in attracting and working with more mass affluent and high-net-worth clients.

Our advisers are leveraging the tools training and access to insurance experts through our private wealth planning experience to both identify and meet our clients' insurance needs. We see further opportunities for growth in this business. And during last year's Investor Day, I spoke about our investment focus as it relates to insurance and our desire to continue to invest in this part of our business, and that's exactly what we've been doing.

Two weeks ago, we announced the partnership with Life Design Analysis, a leading-edge fintech solution provider in the insurance space, so that we can leverage our sales enablement technology to allow us to provide a better adviser and client experience as it relates to insurance. With the strength of this business and the investments in digitalization, we expect to deepen our market penetration and drive further growth.

Turning to Slide 21. This represents another success factor in our journey. Recognition of IG Wealth as the #1 wealth brand from an earned media perspective. Along with our brand's 25% share of voice in the Canadian wealth marketplace, the breadth of our spokespeople is also front and center.

This is more than an accolade of our people in print, in radio, TV and in digital space. It represents our voice and our views being heard, not just by our clients but our future clients. We are in front of the country showcasing our knowledge on financial planning, insurance, tax planning, banking and investment strategy, providing our thought leadership and speaking to our advice capabilities. This will continue to be an important part of executing our strategy and providing us with a platform to reach our key client segments.

Now turning to Slide 22. I'll provide some updates on Rockefeller's progress. Fine assets were up 27% year-over-year and were approximately 9% during the quarter, driven by strong markets as well as continued inorganic and organic growth. Over the last 12 months, organic growth has driven $3.3 billion in client assets. Rockefeller also continues to see strong acquired production during the quarter.

Turning to Slide 23. Wealthsimple saw another incredible strong quarter as they continue to reinforce themselves that is an important part of the Canadian wealth management ecosystem. Wealthsimple AUA in Q1 ended at $39 billion, advancing by an incredible 25% or $7.7 billion during the quarter, another record quarter of growth.

On a year-over-year basis, AUA was up 82%. Client count also expanded by 12% year-over-year to 2.4 million clients. Wealthsimple has continued to prove their ability to execute and continues to deliver strong results.

So with that, I'll turn it over to Luke Gould.

[Luke Gould, executive]

Thanks, Damon. Good morning, everybody. So turning to Page 25, a few comments on the quarter. And first Mackenzie's AUM reached $203.7 billion, up 4.1% in the quarter, driven by strong investment returns for clients. Client returns were 5.5% in the quarter and are just over 10% in the last year.

On point two, investment funds experienced net redemptions of $194 million during the quarter, which continues to be in line with the industry environment, while returns generated for clients to reward clients for remaining committed to financial plans through volatile markets, it did remain challenging for industry flows during RSP season.

In point 3, the share of our assets in 4- and 5-star funds remained unchanged quarter-over-quarter at 51%. And in the bottom left, I'd highlight a couple of noteworthy developments in the quarter.

First, we've launched a number of new funds advised for our Global Quant Equity Boutique in Boston. This includes a world low-volt ETF, a Global Shariah compliant equity fund and in emerging markets, ex-China fund that complements, our China funds sub-advised by ChinaAMC.

As reviewed at Investor Day, our Global Quant Equity Boutique has delivered exceptional performance among world leaders for both its institutional and retail strategy since its inception of MacKenzie in 2017. These new strategies we launched for retail supplementry existing retail strategies that have exceptional performance that we're leaning into with this boutique, and we are actively cultivating the following. This includes our global equity, emerging markets and our PE replication mandates.

We're also very proud of being awarded the lead sponsorship for the United Nations PRI in-person event, which is to be hosted in Toronto during October. This is the world's pre-eminent responsible investing event and we're very pleased to bring our support through our focus on sustainable investing to make this year's conference a success.

In the top right, ChinaAMC's growth continues to impress, with investment funds increasing by 14% during the first quarter alone, and 26% over the last 12 months. This growth continues to be primarily driven by strong investment fund net flows with KRW 201 billion or CAD 35 billion in net flows during Q1. And Northleaf delivered $0.7 billion in new commitments. Since our initial investment in 2021, Northleaf has averaged about $1 billion in new commitments every single quarter.

Turning to Page 26, you can see the trending history of Mackenzie net flows. On the right, you can see the last 12 months trailing net sales are relatively stable. And the chart on the left brings out that net redemptions of $194 million was down slightly from slight net inflows last year. You can also see in the chart on the left that we had net inflows of ETFs of $332 million that offset mutual fund net outflows of $536 million.

On Page 27, on the bottom right, you can see that our overall net investment fund sales is in line with industry peers. In the table on the bottom left, you can see that retail mutual funds continues to be impacted by industry dynamics, while we saw positive flows in retail ETFs as well as institutional investment funds.

On our retail flows, I just comment a few of our larger mandates have had softer near-term performance that's led to an increased redemption rate. Long-term performance on these mandates remains excellent, and they remain disciplined as they invest according to their respective approaches, and I'll provide color on the next slide. Institutional investment fund net sales improvements were driven by our partnerships with Primerica and Wealthsimple.

Turning to Page 28, you can see our performance in net sales for our retail mutual funds by boutique. You'll note at the bottom, this quarter, we've added our retail ETF net creations, and this will be a standing disclosure going forward.

You can see we have strong long-term performance and evolving performance across a number of boutiques, and we have compelling mandates in a number of categories in demand that we're leaning into.

On this slide, as mentioned, I'd highlight the Bluewater and Greenchip have had softer near-term performance within their categories, and this has led to increased redemption rates. And I would reinforce they each had very strong long-term track records, and they continue to be disciplined within the respective approaches and grow sales into this mandate to remain consistent.

As mentioned in previous calls, we're in a trailblazing journey, bringing both private asset classes and quant investing in retail. In the fifth call to the right, you can see our Global Quant Equity Boutiques and they've delivered very strong track records among the top in the world since joined in 2017, and they actually own all these performance numbers with the exception of the 10-year number.

As mentioned earlier, we supplemented our existing retail mandates with 3 new launches, and we're very pleased with the support we're seeing for this boutique heading into Q2. Other noteworthy areas where we're seeing compelling performance in categories and demand included Global Equity and income boutique, our U.S. all-cap growth fund advised by Putnam, which is in the column on the right, and we continue to scale our Northleaf private asset class products, and we are now in excess of $200 million in these products.

On Page 29, I'd highlight that we launched our third annual Sustainable Investing Report in April. This report outlines our continued progress, our approach and the impact that our efforts have. As highlighted at Investor Day in December, we're so pleased to be ranked #1 among large peers in the quality of ESG offering by advisers and also to have the largest thematic sustainable fund in Canada.

And as mentioned earlier, in January, we were awarded the lead sponsorship for the PRI in Person Conference that's being held in Toronto. We view this conference a bit like the Olympics. This is the only time our career this could be held in Canada, and we look forward to this event, and we're hoping to see so many of you there.

This is the world's preeminent responsible investing conference, and it is a precious moment for us to have it here in Canada. We're doing all we can to make it a success and we're looking forward to engaging with institutional investors and other key stakeholders and industry peers on these important topics.

Turning to Page 30, you can see the growth in the Chinese investment fund industry, with industry assets up 6% in the quarter and long-term funds up 2%. In the bottom left, you can see the significant net inflows of KRW 1.6 trillion with meaningful money market flows leading to an 11% increase in money market fund assets in the quarter alone.

On the right, I really want to highlight the continued strength of ChinaAMC's market position. It remains the second largest Chinese asset manager in terms of both long-term funds and overall investment funds. And here, you can see that our market position continues to strengthen, increasing a 5.6% share, up from 5.1% in December and 4.6% 1 year ago.

Turning to Page 31. You can see we've enhanced our disclosures here this period by introducing investment fund net flows for ChinaAMC at the bottom. And you can see ChinaAMC's AUM has now crossed KRW 2 trillion or CAD 400 billion. Overall assets are up 15% in the quarter and 18% in the year. Long-term funds increased by 11% in the quarter and are up 27% in the year, and substantively all this increase came from net inflows.

During the quarter, total investment fund net flows for ChinaAMC were KRW 201 billion or CAD 38 billion. That's an annualized net sale rate of over 40%, and more than half of ChinaAMC's net inflows were from long-term funds. We remain very optimistic for future growth in this industry as China is committed to building a high quality of our market, and we continue to be encouraged and confident in ChinaAMC's ability to maintain and grow market share within this high-growth industry.

I'll now turn it over to Keith Potter.

[Keith Potter, executive]

Thank you, Luke, and good morning, everyone. On Slide 34, you can see key highlights for Q1. Reported and adjusted EPS are both $0.94. In addition to reporting Lifeco's net earnings in our reported EPS, we are also reporting adjusted earnings reflecting Lifeco's base earnings on a go-forward basis. We've also restated prior quarters adjusted earnings.

We are adding this disclosure, recognizing the potential meaningful difference between net earnings and base earnings that can occur quarter-by-quarter since the adoption of IFRS 17 and that base earnings is a key alternative measure of Lifeco's profitability that is followed by the investment community.

In December 2023, we announced our NCIB program, and during the quarter, returned $146 million to shareholders through the quarterly dividend and $12 million in share repurchases. We also bought back $15 million in shares through the month of April.

With the continued strength of Wealthsimple's performance, we marked up the fair value of our investment from $607 million to $722 million, which is fair value through other comprehensive income. And finally, we received dividends from both ChinaAMC and Northleaf with ChinaAMC's dividend of $72.9 million being the largest dividend received to date.

Turning to Slide 35. You can see our AUM&A and flows. As a reminder, we are now presenting our all-historical flows in AUM data, excluding IPC. Coming off of strong Q4, AUM&A was up an additional 5% in Q1, while average assets increased by 5.5%.

Turning to Slide 36. We have our consolidated earnings at IGM. The strong growth in average AUM&A supported higher revenues in both our Wealth and Asset Management segments, and we also had a strong quarter in the mortgage and insurance business driving wealth management revenues.

On point 2, net investment income was higher primarily due to mark-to-market gains on seed capital. And point 3, our operations and support business development expenses were up slightly on a year-over-year basis, but down sequentially, and we are maintaining our full year guidance of approximately 4% growth over 2023.

On Slide 37, we present key profitability drivers for IG Wealth. I'll highlight a few points. First, the advisory fee rate decreased from 102.1 basis points to 100.3 basis points, which was primarily driven by clients moving up wealth bands due to strong growth in average AUM&A, which was up 6%. The growth in AUM&A is more typical of annual growth and had the largest impact on the fee rate. You can see that the product and program fee rates were stable in Q1.

And finally, the asset-based compensation rate is up in the quarter driven by the annual reset and adviser qualification peers and the scaling of the corporate channel, and this offset the downward movement from the program changes I spoke to last quarter.

On Slide 38, you can see IG's overall earnings of $117.2 million, up 12.1% relative to Q1 2023. On point 1, I spoke of the key drivers of advisory fee and product fee revenues on the previous slide and year-over-year and sequentially, other financial planning revenue was up in both the mortgage and insurance businesses.

The mortgage business was driven by a combination of gain on sales, positive fair value adjustments and positive mortgage warehouse income. As a reminder, fair value adjustments were negative last quarter and a year ago. The insurance business also experienced a strong quarter with the highest revenue since 2017, and this is great to see with insurance being a key part of future growth for IG Wealth Management.

Moving to Slide 39, you can see Mackenzie's AUM by client and product type as well as net revenue rates. The decrease in the third-party revenue rate ex Canada Life was driven by a few items. First, the rate was down 0.3 basis points due to having 1 less day in the quarter where we collect revenues for 91 days, pay distributors compensation based on 1 quarter of the year.

We also continue to see strength in our third-party wealth management partnerships with [ PSSL ] and Wealthsimple, which have both diversified and shifted in Mackenzie's AUM mix. And finally, the rate was impacted by the pension mandate reallocated for [indiscernible] mutual funds.

Turning to Slide 40. You can see Mackenzie's earnings of $57.3 million, up 18.4% year-over-year and 16% quarter-over-quarter. Better results were driven by higher net management fee revenue, lower operations and support this development spend as well as higher seed capital mark-to-market returns, so well diversified.

On point 3, operations and support business development Expenses were down 4.9% on a year-over-year basis and down 2.6% from last quarter. And as recall that organizational streamlining occurred in Q2 of last year, resulting in a favorable impact for Q1 2024 when compared to Q1 2023. Also, there are some timing items on investments in initiatives such as middle office product and client and adviser-facing capabilities that will occur over the balance of the year.

Slide 41 has ChinaAMC results on the left, ending AUM of RMB 2.1 trillion is up 15% quarter-over-quarter with average AUM increasing 7%. With respect to earnings on the right, the quarter-over-quarter earnings increased with average assets. On a year-over-year basis, earnings were down primarily due to the regulatory mutual fund fee rate reforms that we spoke to during our Q2 2023 call.

The strengthening of the Canadian dollar and fair value gains last year versus this year, and these items were partially offset by a 9% increase in average AUM over the same time period. As mentioned, our portion of ChinaAMC dividend was the highest dollar value we have received, which is a testament to both the strength of the business and the confidence of management.

On Slide 42, you can see our earnings contribution from companies in each segment. I have 2 comments first on Rockefeller, the loss of $4.4 million was driven by lower revenue in their M&A strategic advisory business, which is volatile quarter-to-quarter and the full implementation of a new equity compensation program I mentioned a few quarters ago. As Damon spoke to earlier, the core private wealth business is performing very well. We do expect a similar result in Q2 an improvement in the second half of the year.

Second, on Northleaf, earnings of $5.7 million after noncontrolling interest are up over last year, and this was driven by higher net incentive fees, which are earned in Q1 of each year and excluding incentive fees, earnings would have been between $3 million and $3.5 million.

Slide 43 provides a summarized view of ownership and our value of strategic investments by segment. A couple of points. First, we increased the fair value of Wealthsimple to $722 million, which reflects the outstanding performance in Q1 that Damon touched on, a revised revenue forecast for the company and an increase in pure multiples.

As mentioned last quarter, we give consideration to IGM's value through some of the parts. At the bottom right, you can see the value of our strategic investments across the segments is over $5 billion.

Slide 44 highlights execution against our capital allocation priorities. At Investor Day and last quarter, we discussed priorities to invest in our business, sustain a strong dividend while balancing the opportunity to repurchase shares and invested companies we already own.

In Q1, in addition to paying the quarterly dividend, we started executing on share repurchases, taking an opportunistic price at a lower share price. At the same time, we have done what we said we would do at the announcement of Rockefeller, a transaction and brought our leverage down below 2x post transaction close.

Our unallocated capital has also increased from $282 million last quarter to $402 million at the end of Q1 2024, primarily from cash earnings net of IGM dividend, including the $72.9 million dividend we received from ChinaAMC. As we move forward, we'll continue to execute on our priorities, including building our businesses and executing on our NCIB.

That concludes my remarks, and I'll open it up for questions.

[Operator]

[Operator Instructions] The first question comes from Geoffrey Kwan of RBC Capital Markets.

[Geoffrey Kwan, analyst]

My first question is for James or Keith, you've talked before about maybe taking a bit of a pause in terms of acquisition activity, but the unallocated capital has increased your balance sheet is pretty healthy, and then you do generate some good cash flow. Just wondering how you're thinking about capital allocation, or in particular, just appetite on being more active on share buybacks or even potentially consideration for a substantial issuer bid?

[James O'Sullivan, executive]

Yes. Geoff, thanks for the question. And -- yes -- our -- we meant what we said at Investor Day, we expect 2024 and 2025 to be 2 years where we will be focused not so much on M&A, but on investing in our core businesses, in IG Wealth and in Mackenzie. So that has not changed.

And you're right, of course, to observe the significant increase in unallocated capital up at $402 million this quarter. And so I think we will continue to invest in the core businesses, but there's clearly an opportunity for us to potentially increase the pace at which we're repurchasing shares, and that's something that we will be giving active consideration to.

[Geoffrey Kwan, analyst]

Okay. my second question was for Damon. I know it's hard to generalize, but are you seeing any differences in behavior in terms of stuff like risk aversion between kind of the mass affluent versus high net worth versus ultra-high net worth segments of your business?

[Damon Murchison, executive]

Geoff, it's -- so yes, are we seeing any difference in terms of risk appetite. I would say, as you move more towards high net worth and ultra-high net worth, you generally get investors that understand risk and return. And you get those that understand the purpose of leverage and how to make money. So yes, there is more of a risk appetite as you move up, but it's obviously client-by-client, right? So -- but generally speaking, I think you'd be accurate if you went with that assumption.

[Geoffrey Kwan, analyst]

Okay. and if I could just sneak in one last question for Luke. I don't know if it's a too detailed question to ask. But on the slide where you have ChinaAMC and the market share versus peers. I couldn't help but notice that ChinaAMC and [ eFund ] had pretty strong AUM growth in Q1, but a lot of the other players were kind of flat to marginally up. Just wondering, if there's anything that you can share in terms of explanation why that dynamic may have played out in Q1?

[Luke Gould, executive]

Yes. One key thing, Geoff, when you look at the industry flows, the story in both the last quarter and this quarter was really around ETFs and around fixed income. And so that's where their strength and both eFund and ChinaAMC experienced really good growth into the ETF businesses. But that was the common thing that bind them together.

[Operator]

The next question comes from Nick Priebe of CIBC Capital Markets.

[Nikolaus Priebe, analyst]

Okay. I also wanted to ask a few questions on ChinaAMC. The first is just a point of clarification. The long-term investment fund net sales of $113 billion on Page 31, that's a Q1 number only, correct? That's not an LTM number.

[Luke Gould, executive]

Yes, that's correct, Nick. Yes. And it was -- $201 billion for total funds and $113 million for long-term.

[Nikolaus Priebe, analyst]

Right. And so if I take that long-term number and I just annualize it, it implies nearly 50% of AUM. So like what's really driving the momentum and specifically the market share gains there. Like is it distribution related? Is it driven by specific asset classes that ChinaAMC? Has it been towards? Or is there anything you kind of point to there?

[Luke Gould, executive]

Nick, I shall I'll point on that slide. So if you look at the trend. So last 4 quarters, they've been around $50 billion in long-term fund that flows, and this one was about $100 billion. Through the last year, obviously, equity markets in China have been challenging. This year, we saw some slight improvements in equity markets.

And the story in terms of net flows was really twofold. One was fixed income funds, capturing a lot of ground and some good movement into ETFs. And for ChinaAMC, we're very fortunate where we've got an industry that's very small in relation to the markets that it's in.

And so industry net flows have been trending at double-digit rates. And ChinaAMC until this quarter was trending at about 20% to 25% a net sales rate annual, and this quarter was at about 40%. So it's a really good growth there and it is driven by ETFs as well as fixed income funds.

[James O'Sullivan, executive]

And Nick, it's James speaking. I would just add on China. I was there in March to attend a ChinaAMC Board meeting. And I've long viewed ChinaAMC as a very special property. It has -- it starts with a very strong ownership. It's controlling shareholders, CITIC securities who are a very, very strong dealer in the region and beyond.

And I think on top of that, as you saw at Investor Day, you've got a very determined and innovative management team led by [ Hema Lee ]. And then the final observation I'd make is that when we saw the fee reforms come in last year, we certainly saw the potential for some consolidation within this industry, and we expected, frankly, that the larger players would have an opportunity to take more share. And we're certainly seeing that. And so as we sit here today, ChinaAMC is a very strong #2. And personally, I believe, on their way to number one.

[Nikolaus Priebe, analyst]

Okay. That's great color. And just turning quickly to Wealthsimple. The AUA growth, again, was very strong, up I think something like 25% sequentially. Clearly outpacing any realistic assumptions that around market-related growth. So I know there's only so much you can say about that investment. But can you give us a little bit of sense in terms of what's driving the client flow at Wealthsimple?

[James O'Sullivan, executive]

Yes. It was -- Nick, it was a remarkable quarter. I -- as I said to our board yesterday, I struggled to find the right word to describe it. The word I landed on was ballistic. It was a ballistic quarter for Wealthsimple. And there was -- I think we recognized there was a surge in activity, particularly trading activity. And that was right across the field. It was crypto. It was equities. It was options. It was well balanced overall.

And so as we sit here today and we look at the Canadian landscape broadly, I can tell you that on the self-directed investing side, for instance, there's no one in this country that's growing faster than Wealthsimple. No one. So extremely impressive performance, very strong leadership, and I think real momentum that they will carry into the balance of this year.

[Operator]

The next question comes from Rasib Bhanji of TD Cowen.

[Rasib Bhanji, analyst]

I guess my first question is for Damon specifically on the cash and cash type flows at IG Wealth. So we've been hearing some commentary around flows into high anchor savings across the overall industry turning flat or actually flowing out and going into fixed income sort of potential Bank of Canada rate cuts. Wondering you're seeing any similar dynamics over at IG Wealth or if you're seeing anything different over there?

[Damon Murchison, executive]

Yes. No, at IG, we're not necessarily seeing a shift from short-term into fixed income. Our advisers are financial planners and what they tend to do, and we tend to do is to dollar average cost into the market over time into the long-term portfolio that meets the client needs. So it will be less of a trade going into fixed income and then going into a long-term. We just DA into the market over time.

[Rasib Bhanji, analyst]

Okay. Understood. And then a couple of questions on Rockefeller. Given the strong AUM&A growth recently. Wondering could you give more color on how Rockefeller protects itself against potential adviser departures? How do they make sure that the AUM&A stays with if there is an adviser departure?

[James O'Sullivan, executive]

Yes. I'll start on that. The -- Greg Fleming, the CEO has spoken about this publicly. When they -- first of all, they're very fussy about who they hire. They're extremely fussy about who gets to carry that Rockefeller card. And so they go into new relationships with their eyes wide open, understanding the adviser and her or his propensities very, very well.

But obviously, underpinning kind of that due diligence and those kind of relationships, if you will, there's a contract. And those contracts are long-term in nature. In fact, I think Rockefeller distinguishes themselves by the duration of the contract that is associated with the onboarding of a new adviser.

So I view there being at least 2 layers of protection. One is the quality of diligence and the scrutiny associated with onboarding new teams, and secondly, they're very well protected through a long-term contract that's associated with the payment made to the adviser when they join.

[Rasib Bhanji, analyst]

Appreciate it. That's helpful. And if I could just sneak in one last question. Keith, I think this might be for you. Other financial planning revenues at IG Wealth. I appreciate the breakdown here between mortgage and the insurance business. Just wondering, on a normalized basis, if you strip out fair value gains and any other hedging gains, what would be the normalized level of revenue coming from this line item?

[Keith Potter, executive]

Yes, that would have been about, call it, $2 million if you strip out the fair value. You can think about a run rate in and around $7 million would be a reasonable expectation. It is a volatile business. You've seen that quarter-to-quarter, but you strip out the volatility and that's what you should be looking at.

[Operator]

[Operator Instructions]

[Unknown Executive]

Keith has just [indiscernible] the mortgage income component [indiscernible].

[Operator]

The next question comes from Jack Gloyn of National Bank Financial.

[Jaeme Gloyn, analyst]

I just had a question on the -- on the net sales at Mackenzie. So you disclosed that the net sales on an LTM basis proved to 3.8. And I noticed that, that's -- that's a bit lower than the industry peer average, which is 3.4. So I just wanted to know what was driving that underperformance recently? And how do you see that trending going forward?

[Luke Gould, executive]

Great question. So back on Page 28, you can see the net sales and the performance by boutique. So as mentioned, Bluewater and Greenchip, and you can also see the growth boutique on that page. Those are 3 boutiques that had weaker near-term performance. But as mentioned, they remain very disciplined according to their own respective approaches. They continue to have very strong long-term performance, but that's where the decline in net flows occurred.

We often say we have a boutique approach. And what that means is we're portfolio managers, we believe in diversification, and at moments like these, we seek to have things that are compelling and relevant to pivot into, and we do have a number of those offerings that are actually very compelling and relevant to the current environment that we are leaving in on that is Quant Global Equity income, some of our fixed income mandates has some growth mandates that you can see the [indiscernible] on Page 28.

But the softness in near-term performance in Bluewater and Greenchip explained the slight decline in net flows that we experienced relative to the industry this quarter.

[Operator]

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

[Kyle Martens, executive]

Thank you, Karl. Once again, we'd like to thank everyone for following the IGM Financial story and for joining us on the call this morning. And Karl, with that, we can close out today's conference call.

[Operator]

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