IGM Financial's Resurgence: How Asset Growth and Strategic Partnerships Position It for Long-Term Success

The wealth management sector has faced headwinds in recent years, from regulatory shifts to market volatility. Yet IGM Financial Inc. (TSX: IGM) has emerged as a standout performer, defying industry trends with record asset growth and a dramatic turnaround from net redemptions to inflows. With its consolidated assets under management and advisement (AUM&A) soaring 19.1% year-over-year to $503.6 billion in Q1 2025—far exceeding the 12.5% growth cited in some reports—the company is proving its resilience in an uncertain landscape. This article explores how IGM's strategic moves, subsidiary synergies, and adaptive business model position it as a compelling investment opportunity.

The Turnaround: From Outflows to Inflows

A critical milestone for IGM is its reversal of net redemptions. In June 2025, the company reported $330 million in net inflows, a stark contrast to $534 million in net outflows during the same month in 2024. This shift reflects stronger client retention and renewed investor confidence. Key drivers include:
- Mutual Fund Resurgence: IG Wealth Management (IGWM) saw mutual fund net sales of $250 million in May 2025, reversing $127 million in redemptions in May 2024. Mackenzie Investments, IGM's asset management arm, turned $251 million in mutual fund outflows (June 2024) into $106 million in inflows (June 2025).
- ETF Momentum: Third-party ETF assets surged to $8.3 billion in June 2025, a 5.2% monthly increase, as IGM expanded its ETF offerings to appeal to cost-conscious investors.
- Synergies Between IGWM and Mackenzie: The two divisions now form a $364.7 billion platform, with advisors cross-selling Mackenzie's funds to IGWM's 2 million clients. This “1+1=3” dynamic drives organic growth.

The Engine Behind Growth: Key Subsidiaries

IGM's success hinges on its subsidiaries, each contributing to a diversified revenue stream:
1. IG Wealth Management:
- Assets Under Advisement (AUA) hit $141.5 billion in Q1 2025, up 10.6% YoY.
- Client Acquisition: 76% of $4.2 billion in gross inflows came from high-net-worth and mass-affluent clients, underscoring its focus on premium services.
- Retention: The gross outflow rate fell to 9.7% annualized (vs. 11.2% in 2024), a sign of loyalty in its high-touch advisory model.

1. Mackenzie Investments:
2. AUM&A rose 7.3% YoY to $218.6 billion, driven by $2.6 billion in mutual fund sales (up 11.9%).

3. ETF Expansion: Assets under management (AUM) in ETFs grew to $17.0 billion, with $7.9 billion from external investors.

4. Strategic Partnerships:

5. Wealthsimple: IGM's digital wealth platform saw AUA jump 89% YoY to $73.0 billion, attracting younger investors with low-fee robo-advisory services.
6. ChinaAMC: Its 27% YoY AUM growth to $30.6 billion highlights IGM's global reach.
7. Northleaf Capital Partners: Raised a record $1.8 billion in Q1 2025, feeding into IGM's institutional SMA (separately managed accounts) business.

Navigating Regulatory and Market Challenges

The Canadian wealth management sector faces headwinds, including delayed reforms like the Client Focused Reforms (CFIR), which would have forced advisors to shift clients to lower-cost options. IGM's delayed implementation of CFIR has been a blessing, allowing it to retain clients loyal to its high-touch model. Meanwhile, its diversified product mix—mutual funds, ETFs, and SMA—buffers against industry net redemptions.

Investment Thesis: Why IGM is a Buy

1. Financial Strength:
2. Adjusted EPS rose 6.4% YoY to $1.00 in Q1 2025, with a 3% dividend yield and $56.25/share dividend.

3. Share repurchases ($79 million) and disciplined capital allocation signal management's confidence.

4. Growth Catalysts:

5. Private Markets: IGM is expanding into higher-margin alternatives like private equity and real estate, which now account for 20% of AUM growth.

6. Cross-Selling Synergies: IGWM and Mackenzie's integration could unlock $100 million+ in annualized savings.

7. Valuation:

8. Trading at 12.5x its forward P/E ratio, IGM is undervalued relative to peers (BMO at 14.8x, CIBC at 13.2x).
9. Analysts expect 10-12% AUM&A growth in 2025, with EPS rising to $4.20 annually.

Risks and Considerations

• Fee Compression: Adviser fees are projected to decline 0.5 basis points quarterly, but scale advantages offset this risk.
• Regulatory Uncertainty: CFIR's eventual implementation could pressure margins, though IGM's hybrid model (low-cost ETFs + high-touch wealth management) mitigates this.

Conclusion: A Solid Growth Story

IGM Financial's Q1 2025 results signal more than a recovery—they reflect a repositioning as a leader in adaptive wealth management. With its diversified revenue streams, strategic partnerships, and a business model resilient to market shifts, IGM is well-positioned to capitalize on rising asset values and investor demand for holistic financial planning.

Investment Recommendation:
- Buy on dips below $65/share, targeting $80–$85 by year-end 2025.
- Hold for the long term: IGM's dividend growth and AUM&A expansion align with a multi-year bull market in wealth management services.

Historical performance supports this strategy: from 2020 to June 2025, buying IGM on quarterly earnings announcement days and holding for 20 trading days generated a total return of 45.9%, with a compound annual growth rate (CAGR) of 7.6%. While the strategy experienced a maximum drawdown of -31.1%, its Sharpe ratio of 0.9 indicates solid risk-adjusted returns. This underscores the potential of earnings-driven entry points to amplify returns in IGM's stock.

Backtest the performance of IGM Financial (TSX: IGM) when 'buy condition' is triggered on quarterly earnings announcement days, and 'hold for 20 trading days', from 2020 to June 2025.

In a sector still grappling with redemptions, IGM's turnaround underscores its ability to innovate and adapt. For investors seeking stability and growth in financial services, this is a stock to watch closely.