CI Financial Corp (CIXX) 2014 Q2 法說會逐字稿

All participants, please continue to stand by. Your meeting is ready to begin.

Good afternoon, ladies and gentlemen. At this time, I would like to welcome everyone to CI Financial's 2014 second quarter results Webcast. (Operator Instructions).

This presentation contains forward-looking statements concerning anticipated future events, results, circumstances, performance, or expectations with respect to CI and its products and services, including its business operations, strategy, and financial performance and conditions.

Although management believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statement involve risks and uncertainties. For further information regarding factors that could cause actual results to differ from expectations, please refer to management's discussion and analysis available at www.cifinancial.com.

This presentation includes several non-IFRS financial measures that do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

However, management believes that most shareholders, creditors, other stakeholders, and investment analysts prefer to include the use of these financial measures in analyzing CI's results. These non-IFRS measures and reconciliations to IFRS, where necessary, are included in management's discussion and analysis available at www.cifinancial.com.

I would now like to turn the call over to Mr. Stephen MacPhail, President and CEO of CI Financial. Mr. MacPhail, you may begin.

Thank you, and welcome to CI's conference call for our second quarter results. Since the end of the first quarter, a lot has gone on at CI. The Bank of Nova Scotia disposed of the majority of its CI shares in a highly oversubscribed transaction and I'm pleased to say generating a significant gain for the Bank.

We celebrated the 20-year anniversary of CI going public, providing investors a gain of 4,569% since June 1994, a 20-year annual growth rate of 21%. This ranks CI as the fifth best performing stock in the TSX. In fact, CI's been in the top 10 performing stocks for the last 16 years.

During June, CI celebrated reaching the CAD100 billion mark in assets under management, firmly establishing CI as the largest independent asset manager in Canada.

Looking specifically at the quarter, CI reported earnings per share of CAD0.45, up 22% from the prior year, outpacing our 20% growth in average assets over the same period. On a consecutive quarter basis, our earnings were up 5%, right in line with our expectations from our 5% asset growth.

Net sales in Q2 were CAD1 billion, up from what had been a particularly strong second quarter in 2013.

Average assets under management in the second quarter were up 20% year over year and, as I mentioned, 5% on a consecutive quarter-to-quarter basis. And our increase in cash flow resulted in our net debt down 44% from Q2 2013 and 24% from the prior quarter.

Looking at sales, CI experienced gross sales of CAD3.5 billion in the second quarter, up 4% from a year ago. At June 20th, CI's net sales of CAD2.7 billion year to date were 28% higher than in 2013.

Sales continue to be well diversified by channel, reflecting our channel-focused approach to sales and service. Interesting enough, since BNS announced that they are monetizing their interest in CI, support from advisors has gone up, and our net sales improved immediately.

A fact that demonstrates the long-term success of CI business is that, since 1994, CI has achieved positive net sales in 88% of all quarters, ranking us number one in Canada.

Things continue to be positive from a sales outlook perspective for CI. We currently have achieved CAD3 billion in net sales year to date. We have a record level of activity planned for fall 2014 by sales and marketing, where we continue to invest in expanding advisor-facing staff and in training and technology.

From a performance perspective, our money management professionals have done an outstanding job for clients, with 85% of CI's long-term AUM in either first or second quartile over 10 years.

This performance is diversified over our money management groups with Eric Bushell's Signature funds at 78% top two quartiles over 10 years, 98% of Harbour fund assets in the top two quartiles over 10 years, and an astonishing 100% of our managed money solutions are top two quartiles over 10 years.

Looking specifically to individual fund performance, you can see that Black Creek, Cambridge, Harbour, Portfolio Series, and Signature all have excellent investment returns, positioning CI very well for the foreseeable future.

And with that, I'll turn it over to Doug, CI's Chief Financial Officer, to discuss the quarter in more detail. Thanks, Doug.

Thank you, Steve. This slide of financial highlights compares the second quarter of this year with the second quarter of last year and gives some of the details on the numbers that Steve mentioned.

Average assets under management were up 20% from CAD81.7 billion a year ago to CAD97.9 billion this quarter. Next, net income was CAD127.8 million, and that was up 23% from CAD104 million last year, and on a per-share basis was up to CAD0.45 from CAD0.37 last year. And as Steve mentioned, that's an increase of 22%, in line with asset growth and expectations.

EBITDA per share was up CAD0.11 to CAD0.78, a 16% increase. And dividends paid were up 12% as CI paid out CAD73.7 million last year, and that was at a rate of CAD0.26 during that quarter, and CAD82.6 million in the first quarter this year at a rate of CAD0.29.

And net debt has declined CAD195 million from CAD448 million at the end of the second quarter of 2013 to approximately CAD253 million at the end of June 2014, calculated as gross public debt outstanding of CAD500 million less CAD247 million of excess cash and marketable securities.

This gives CI a net debt-to-EBITDA ratio of under 0.3 to one. And that continues to provide CI with significant financial flexibility.

Now we can take a look at quarter-over-quarter highlights, average AUM, as Steve mentioned, up 5% from CAD93.5 million to CAD97.9 million. Net income also up 5% from CAD121.7 million to CAD127.8 million. And the CAD0.45 of earnings per share was also up 5%, as expected, from CAD0.43 last quarter.

EBITDA was up 4% from CAD212.2 million to CAD221.5 million. And the CAD0.78 per share is also up 4% from CAD0.75 last quarter.

The dividends paid of CAD82.6 million was an increase of 2% from CAD81.3 million. And the net debt of CAD252.6 million was down CAD82 million during the second quarter alone.

CI's EBITDA margin has held fairly steady over the past year and was 47.8% this quarter. This reflects the fact that, even as CI's average management fee rate has declined over the year during the -- due to the mix of business, we continue to generate about CAD0.48 of EBITDA profitability on each revenue dollar.

CI introduced a couple of new performance measures last quarter, the first of which was the asset management margin. This margin measures how much we retain out of management fees after paying trailers, SG&A, and deferred sales commissions.

We take management fees less trailer fees, SG&A, and DSC amortization as a percentage of management fees on a trailing 12-month basis. And we see that we are left with almost CAD41 of every CAD100 in management fees earned, up from about CAD39 one year ago.

This measure eliminates the financing impact of frontend versus backend funds, since we already have deducted trailers and DSC. And it also eliminates the distortion of equity and fixed income mix changes and retail and institutional mix changes because it is measured as a percentage of management fees and not AUM.

CI's SG&A, calculated as a percentage of AUM, and we are showing it here in basis points, has declined significantly from the second quarter of last year. We saw on the quarterly highlight slide that CI's average AUM grew by 20% from last year. At the same time, SG&A spend grew by less than 10%. So, we see the drop from 38 basis points to 34.8 in the most recent quarter.

And here is the other new performance measure that we are introducing last quarter, the SG&A efficiency margin. And here, we look at how much is left over after we spend on SG&A out of the available pool of management fees less the trailer fees and DSC that we have to pay.

In the past 12 months, CI has retained over 70% of that available pool, up from 68.1% one year earlier. Put another way, CI spends less than 30% of the amount available after paying trailer fees and DSC out of management fees.

Next, we have five quarters of free cash flow. Note that the first quarter is typically a low point because of the increased spend on DSC during RSP season. And we have a big jump here to a record quarterly free cash flow of CAD138 million. And that is CAD24 million higher than the second quarter last year.

This year-over-year increase is a result of operating cash flow growing by more than CAD21 million, and we spent less on deferred sales commissions this year as the trend away from deferred load sales is continuing.

Here in the first part of the table, we have some detail on the change in free cash flow from last quarter to this quarter. Last quarter's operating cash flow of CAD165 million less commissions of CAD42 million gave us CAD123 million in free cash. And this quarter, we had CAD168 million operating cash flow and CAD30 million of DSC paid.

The next section details the amounts returned to shareholders. And we repurchased CAD5 million of stock in the second quarter, actually all in the last part of June, at an average price of CAD34.80 and increased the dividends paid to CAD83 million from CAD81 million last quarter. I'd like to also point out that we repurchased an additional CAD24 million of stock in July.

CI's run rate quarterly payout on dividends is now CAD85 million. And in the second quarter, the net surplus of CAD50 million plus an increase in working capital is what reduced net debt in the quarter.

We'd like to continue to highlight CI's return on equity, which hit 26% this quarter and is another indicator of the strong performance of CI. This return has grown over the past year from 23% as CI leverages the growth in its AUM to earnings growth and CI's limited need for additional capital to support that growth.

And here, we have a chart of CI's annual dividends paid since 2010 and through to our forecast total payout for 2014 shows a compounded annual growth rate of 11%.

I will now turn it back to Steve.

Thank you, Doug. As we look at CI's asset growth chart over the last year and a half, you can see we're off to a good start for Q3 2014, with our current assets up about 3% from the Q2 average. Our assets are well above when we increased the dividend last quarter, putting CI in an excellent position for potential future increases.

So, to summarize, our fully independent status has been well received by advisors and I believe opens the doors to expanding distribution. Our current assets under management are over CAD100 billion, creating an exceptional base for our company for increasing sales, service, and support to the advisor network.

Our return on equity has been over 20% for four years running. As a result of our extensive investment in sales, marketing, and training, combined with excellent performance from our money managers, our year-to-date sales are ahead of 2013, which you will recall was an excellent year itself.

Investors in CI's funds are focusing more on equity-oriented, especially in the global space, and balanced investments.

And lastly, continued asset growth and increasing profitability is positive for dividend growth, share buybacks, and debt reduction.

And with that, I think we'd be happy to take any questions you might have on our second quarter results. Thank you.

(Operator Instructions). Gary Ho, Desjardins.

Hi. It's Gary from Desjardins. On the buyback, it looks like you purchased CAD24 million so far in Q3. Stocks pulled back a bit recently. Just wondering what your thoughts are on being more aggressive with the buyback. And as well, in terms of uses of capital, how would you rank buybacks versus dividend increases and acquisitions?

Hey, Gary. It's Doug. We look first to maintain our dividend in line with the growth in our assets and profitability. And then beyond that, we would buy stock back when it's opportune. We'd definitely look at the level of the -- the price of the stock compared to the level of our assets and profitability and make decisions that way.

We have felt during July that we had -- given our significant cash flow, we could buy back, like I said, CAD24 million. And we would look to continue at about that pace, only changing it if our valuation moved significantly either higher or lower.

So, the CAD24 million per month would be a good pace to -- as a run rate?

If our relative valuation stayed where it was, yes.

Yes. Okay. And then -- .

-- Gary, it's Steve MacPhail. I think one of the things that we've talked about is we tried to look at this over a fairly long time horizon. And we don't get particularly uptight if we buyback one month or we don't. We tend to be opportunistic buyers. And Doug and his team run models all the time as to when they want to buy.

But, what we do is we look at it -- if we look over a five-year time horizon, and I spoke about this at our annual meeting in June, if we increase dividends, as Doug talked about, in line with increasing profitability and then looked at what type of free cash flow we had available and then looked at moving our leverage up to a level something below one to one, over five years, we basically have about CAD2 billion of excess cash to work with.

And I would guess, at this point in time, a reasonable portion of that will go towards share buybacks. But, we just can't always predict when it will or will not happen. But, certainly, that is a priority to us to take advantage of weakness in the market, of for example, right now, we see that our multiple on CI is down from where it was before. So, clearly, from our perspective, it becomes much more of an attractive buying opportunity.

Perfect. And then where would acquisitions fit in? Would that be after buybacks and dividend increases, would you say, or is it more opportunistic as well?

I'd say they all rank the same. We don't say we're going to buy back stock or make an acquisitions. Generally, with many acquisitions, if -- you have to look at them from an equity perspective as opposed to just purely view them on a leverage perspective. So, if there's a transaction for CAD100 million, then we would view that -- say we could buy back CAD100 million worth of stock and make the same acquisition. We wouldn't say it's an either/or. A good acquisition, we'll always figure out a way to do it.

Yes, and then just on that, has the activity level on acquisitions or discussions changed in the last three to six months, let's say? And can you give us an update on that, please?

I wouldn't say it's changed. I haven't seen anything intensify. I do think, given CI's status now, that we will see more opportunities because we're going to approach it as a totally independent company. So, we should see some other opportunities. I think there is consolidation in our business going on as we speak. But, it's just from where sales flows are going as opposed to companies buying each other. But, I wouldn't be surprised if, between now and the end of the year, we see a bit of a pickup in activity.

Okay. And then, Doug, just a numbers question. Anything one time in that CAD138 million free cash flow number, or is that a good number to work off going forward?

Yes, that's a pretty good number for this level of assets.

Yes. Okay. Perfect. That's it from me. Thanks.

Geoff Kwan, RBC.

Yes, it's Geoff Kwan at RBC. Good afternoon, guys. I just had two questions. Steve, you mentioned and you talked about with Scotia sale that you were seeing some increase in sales from advisors. And then you also talked about from other distributors. Kind of, I guess, it sounds like, hopefully, we'll get some increased sales from that standpoint. Is that the way to characterize it? You're hopeful that this will lead to more broader distribution arrangements, or is that stuff where you've already kind of -- may have had some initial or preliminary discussions?

I say, Geoff, it's both, that the -- for the most part, CI is involved with almost every channel out there. And in existing channels we had, we saw higher levels of support. But, there are some areas where we could do business where -- not that anyone's ever bothered by Scotia owning 37% there (inaudible) that way. But, I think, in the back of some people's minds, they go: Gees, if we did more business, we could wake up one day, and maybe we're giving business to a competitor.

And that issue's not there. CI's clearly 100% independent. And whatever business they do with us, we'll -- like, we are kind of the big independent out there now. So, it's not a eureka moment-type thing. But, we certainly saw on an immediate basis an uptick in net sales of about 25% to 30%.

And as each day passes, it's hard to say if you're still at a higher level. But, certainly, during the quiet month of July, we've continued to see strong sales in June. And I do believe that -- when we look at the sources of that, it's that people are just a little bit more comfortable with doing more business with CI.

To answer your second question, can it lead to more opportunities? I absolutely do believe that there could be some opportunities to get involved with some distribution with other big relationships that we might have that might've been a bit reluctant before, but now would want to do more business with us. So, I think it's -- from our perspective, that's a bit of -- that's a positive development for us.

Okay. The second question I had was, when I take a look at the -- on the Assante side, the admin fee revenue line as a percentage of average AUA, that's been kind of declining over the last two to three years. I saw it again this quarter. And I'm just wondering if there's any color you can provide on that and how to maybe think about the outlook on that over the next coming quarters.

Well, Doug will answer. It's actually a good news story. But, I'll let Doug answer that one for you.

Sure. It's a bit of an accounting story, too. The line that you see of admin fees, our income statement, represents third-party admin fees that Assante earns because the trailer fees and commission they earn from CI get eliminated. So, what you're seeing is, as CI's proportion of Assante's assets go up, that admin fee line is not growing as quickly as their total AUA. So, while we're getting a lot more management fees on Assante business, that revenue line is only going to grow at the same speed as their third-party revenues.

Okay. So, the third-party revenue, that's coming -- as a smaller proportion of that, more of it's going to CI. So, it's kind of -- is it then a little bit of a shift out of dollars at Assante and going up into the CI level, or -- ?

-- Yes, because when we eliminate the Assante revenue that it earns from CI at the top, it comes out of the trailer fee expense and to a certain extent the DSC amortization expense.

Okay. Okay. Perfect. Thank you.

It's a good news story for CI as a whole.

Okay. Thank you.

Paul Holden, CIBC.

Thank you. Calling from CIBC. So, Steve, when you say there's additional opportunities with investment advisors or you're already picking up additional net sales, is that coming from other bank channels, like the IROC channel at other banks? Is that where you're seeing the incremental bump?

Our business in the IROC channel certainly continues to be good. But, there's other areas out there, credit unions, things like that, where we've been seeing a pickup in business.

Okay. So, it's other deposit takers, though, if I could -- .

-- Right -- .

-- Characterize it as such. Okay. Okay.

And to keep in mind, we had -- when Scotia owned 37%, we had great sales. So, that's what I said. This isn't a huge change for us. So, we were happy with where we were before. But, this is a positive development that I think even we were surprised with.

Yes. So, actually, to that point, you're now lapping some really good sales numbers from last year. Where can we think about the incremental dollar coming from? It's a good problem to have, but something I'm scratching my head a little bit about. How are you going to make sales even better than they already are?

Gees, you're greedy. You know what? I don't think we -- we just didn't look at it that way. And if you talk to Derek Green, who heads up CI Investments, we've structured his department so that each distribution channel we have, we have teams of people that are dedicated to it because we -- what we realize is that, in many cases, there's a lot of advisors that haven't been dealing that much with CI but are inclined over time to deal with more so.

I would say our greatest growth potential comes from the areas that we already deal with. We're not necessarily heavily penetrated everywhere. And so, that's really the focus of where we are. And it's hard to say whether or not we'll ultimately do more business with other bank channels. But, you know us. We try everything to get it done. I think most bank channels are pretty protective of their own.

But, they're -- I think with CIB, like the true independent here, there's more opportunity. If we're going to be one of those choices outside of their own business, then we're even in better position to be that choice now.

Yes, makes sense. And maybe you can provide us with an update on the Cambridge AUM and any progress in terms of getting the institutional offering going there with the Cambridge team.

Yes. So, their assets continue to grow. I've mentioned they're through CAD12 billion. I don't have the precise number at my fingertips for today. I would just say we continue to see good positive sales into their funds. And there's been market appreciation.

From the institutional side, we continue to lay the groundwork on it. But, for us, looking at an institutional business is bit more US oriented. And the discussions we're having with them is, how do we add more money management expertise to be able to grow that business because the one thing that we're certain cognizant of is never going after institutional business at the risk of diluting the attention our money managers are giving to our retail clients. That's absolutely a critical number one issue.

So, Paul, we'll turn down business. A good example would be someone could say: Hey, I want a CAD250 million -- give you a CAD250 million separately managed account. Well, if the same money manager is looking after CAD2 billion in retail assets and all of a sudden goes: Gees, like, CAD2 billion retail assets will take the same amount of work as -- or the CAD250 million will take same amount of work as the CAD2 billion, then you haven't done a good service to your retail clients because you've diluted the ability of the money manager to do an outstanding job on both.

And that's -- what Cambridge is doing right now in the Canadian market is outstanding. We're not looking to change that. So, Neal Kerr heads up that group, is trying to get -- put together a plan for the US. I would say, with a year and a half, we'll have something pretty good there, though.

Okay. Okay. And final question, now that, obviously, the distribution opportunities with Scotia have changed, would you do anything strategically different with Assante, i.e. would you be more aggressive in growing the number of IAs at that channel?

Sorry, just got something caught in my throat. The -- definitely, if you talk to Steve Donald, who heads up that area, he sat down and literally just presented to the Board today that he's got a little over CAD30 billion in AUA in that firm now, up from I think CAD11 billion when we bought it. But, he's trying to figure out how to get that to CAD40 billion.

And what we see is, with the changing regulatory requirement, it'll make it increasingly difficult for a lot of firms to be able to deal with the new rules as they come out and increasingly come out. Some came out this year, a lot more over the next two years. And so, we think that'll create the opportunity where a lot more good advisors will want to join the Assante platform.

And absolutely, I think we're looking to expand in that area. And certainly, if you talk to the National Council, Advisory Council at Assante, the regional councils at Assante, they're all in favor of us looking to add more advisors into those areas. And they're trying to encourage it because they see the benefits of economies of scale. So, they really like this idea of the more they can grow, the better branding that we have, the easier it makes it for them to provide services to their clients. So, I think it's a good opportunity right now.

Okay. And that'll mostly be organic versus acquisition, given the lack of supply on the acquisition side?

Yes, I don't -- it's not a lot. I don't think you can be able -- they're buying dealerships, might be some small ones, where it's two or three people in a small dealership makes sense. But, there aren't a lot of big dealerships out there of any size anymore. So, I will call kind of advisor-by-advisor basis and then just growth of the advisor business themselves.

Okay. Great. Thanks for your time, Steve.

You're welcome.

Graham Ryding;TD Securities;Analyst

Hi, thanks. TD Securities. Maybe I could start with just a little bit of color around the management fees. So, it's very clear that it's been declining slightly because the change in your AUM mix. Should -- my first question would be, should we expect this sort of rate of decline, which looks like it's about 4 basis points over the past year, should -- is that a reasonable trend to expect going forward? I'll leave it there for my question. Then I'll follow on from that.

Well, Graham, it depends on three things. And as Steve mentioned, we've seen equity and balance funds pick up a bit. So, that trend has kind of leveled off, where we're not seeing a decline because of move into fixed income.

The retail versus institutional mix has also leveled off. But, if we did see an uptick in the amount of institutional business we do, you'd see the management fee top line come down.

And the third one is the area of our business that's growing the fastest, even faster retail class A, is our high net worth business. And generally, because we're getting large account sizes in, it's at a lower average fee. So, that's the one that's been driving our average management fee down over the past year.

And so, if that's the only one that impacts us, yes, that's probably a good rate that we'll see over the coming year. But, like I said, if we see a move back to fixed income or if we do more institutional business, the top line might drop at a different rate.

Okay. Fair enough. So, I guess your visibility on the retail-institutional mix is -- you're hesitant to sort of guide on that one.

It's -- yes, it's hard because it's lumpy, right?

Yes. Okay. That's totally fair enough. And would you be willing to provide -- maybe to quantify sort of what the mix of your AUM is today that's in this high net worth bucket versus what it was a year ago?

That business has grown probably 25% versus our retail just growing by the 20%.

Okay. And on the net sales front, I understand that your managed solutions are a big driver of your net sales in certain channels. Is there any sort of color around the percentage of your net sales that are within these managed solutions versus just standalone funds?

I had that number. I think the managed solutions of our net sales probably about 30%, 35%.

And would that be consistent across your channels, or would Assante and some of the other channels have a higher mix of that managed product?

Assante would have -- certainly have a higher mix of that product. They're big proponents of some of these solutions and, certainly, even a driver into some of our higher net worth utilizing the same.

Right. Okay. And just quickly, you touched on the M&A front before. So, I won't go there too much. But, just can you remind me of the size of deal that you'd be willing to consider if the opportunity was there? And should we still be thinking that the US is where you would be most interested in, or would you also look globally?

On a breakdown of global versus US, that -- .

-- No, no, I was talking on the M&A front, your interest.

Sorry. Someone just had asked me another question while you did that. The -- .

-- Do you want me to repeat the question?

Yes, that'd be helpful.

Sure. No problem. Just what's the size of a deal that you would potentially consider on the M&A front? And be -- and secondly, are you still more interested in the US market, or would you consider a global opportunity?

I think we certainly would consider a global opportunity that -- I think the way we have to look at CI, and we talked a bit about this today, is that, five years from now, we're going to look back and say we're a global company that just happens to be located in Canada. And maybe a good comparative might be you look at something like Aberdeen Asset Management, they're a Scottish company that's global. It just happens to be located in Scotland. But, it's got a diversified global business.

I don't see any reason why we can't globalize the same way. So, then the question you're asking on the M&A, would we do something more on the global basis, I think you always have to be prepared to look at everything. You can't say: I won't do this, or I won't do that. Be prepared to look at every opportunity.

But, I look at our 25% investment in Altrinsic, and they're out of the US, but I would call that a global opportunity. They have business in every continent. And so, I would call that a global company, just happens to be located in Greenwich, Connecticut.

So, I think, from our perspective and when I talked about the US before, is that, on a global base, that would be more institutional business as opposed to retail business. And to succeed in that area, I think you have to be willing to operate around the globe, so either way.

Why I liked a US-based company before is just that it's close. It's easy. We tend to understand the rules there a lot better than we would, say, trying to buy something in the UK, where a lot of its business might've been in the UK. We don't have as good a handle on it, or something out of the Far East.

So, we try to stay within our comfort zone and where we believe we have expertise. But, I ultimately believe, whatever we do, whether it's US based or something else, it's just part of this process of becoming more global.

Okay. Great. And do you have a comfort in the size that you'd be willing to consider, either AUM or price tag?

The -- well, obviously, the smaller the price tag, the easier it is, right? If you're a CAD20 million deal, you don't worry because, okay, this is pretty easy. But, you never know. You could wake up, and there could be a CAD3 billion or CAD4 billion opportunity. And if it was a perfect opportunity, maybe -- I think you have to consider it. You have to -- you always have to look at what's good for your shareholders and say: Okay. Does this make sense for shareholders?

And maybe a brilliant opportunity comes up to partner with a global partner. And it could be that size. I would say we certainly would look at it and entertain if it made sense.

But, if it came to saying -- paying cash for something, then I think we've always looked at kind of up to CAD500 million, CAD600 million kind of would be our comfort zone, in that area. But, if you're talking something different, merging with someone, or some other form of transaction, then you have to think a little bit bigger.

Okay. Perfect. Thank you.

Scott Chan, Canaccord Genuity.

Yes, Canaccord Genuity. Steve, I just have one question. The retail sales, obviously, have been picking up. And I guess, instead of looking at the distribution side, in terms of the investment teams, is there a high concentration of net sales from certain investment teams, like Cambridge and Signature?

Well, right now, I would say, if you look at the business, Black Creek, Signature, Cambridge are all doing well right now. It doesn't surprise us. When we've had good markets, value seems to be little less attractive. But, when I look at the performance numbers, Steve Jenkins, Harbour global fund, it -- these are first quartile numbers. It's spectacular.

And so, I do believe we eventually see the shifts. So, I'm not surprised as to where we're seeing the business right now. But, that is our business model to have five or six different money managers. And if they're all getting business at the same time, it means we don't have enough style diversification.

And so, we expect certain groups to be doing well at certain times and other groups to be doing well at other times. And that's been the beauty of the CI model. And that's why we've been in net sales 88% of the quarters in the last 20 years because the money doesn't leave CI. It'll often just shift around into different management groups.

But, today, if you're looking at -- those would be the three groups that are doing well. And then certainly our managed money solutions, which is CI investment council, our internal people, are getting a big chunk because -- under Alfred Lam. And he uses all the money management groups at CI. But, when people are using the managed solutions, they're not -- Alfred Lam and his whole team is really picking the mix for them. So, those would be the groups today.

Okay. That's great. Thanks.

Steven Bolen, GMP.

Hi. GMP. Just one question, Steve. You mentioned some positive feedback from I guess independent advisors and even I guess some advisors at other banks. Can you talk any -- have you had any feedback from the Sun Life agents and their sales force and any feedback from I guess Sun Life management? And do you expect any kind of change in relationship there in terms of product distribution going forward?

No, our relationship with Sun Life Advisors is as good as it's ever been. And so, I think they've always had a positive experience with CI, whether Scotia was involved or not. So, I don't think that was a big factor for them.

But, certainly, since the transaction occurred, we continue to see great business from them. So, I'd just say that that's positive. And we've got a good relationship with Sun Life management. So, I don't see anything kind of changing there from a Scotia perspective.

Again, the only thing that's changed is that there was always that question, would one day Scotia own the whole thing or not? And that question's off the table now. And Scotia made its decision. And so, I think it's just -- by clarifying that level, that relationship just makes it easier for everyone to plan. So, I would call that a positive thing.

Okay. Thanks very much.

You're welcome.

Thank you. We have no further question registered at this time. I would now like to turn the meeting back over to Mr. MacPhail. Please go ahead.

Well, thank you for joining our Q2 conference call. I really appreciate it. And we look forward to reporting to you in November, when we report Q3. Enjoy the rest of your summer. Thank you very much.

Thank you. The conference has now ended. Please disconnect your lines at this time. And we thank you for your participation.