CI Financial Corp (CIXX) 2014 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. At this time I would like to welcome everyone to the CI financial 2014 fourth-quarter results webcast.

(Operator Instructions)

Please note of the cautionary language regarding forward-looking statements and non-IFRS measures on the second page of the presentation. I would now like to turning over to Mr. Stephen MacPhail, President and CEO of CI Financial. Mr. MacPhail, please go ahead.

Thank you, and good afternoon. Welcome to CI's conference call for our year ended December 31, 2014 results. With me today are my colleagues Doug Jamieson, Executive Vice President and Chief Financial Officer; Derek Green, President of CI Investments; and Steve Donald, President of Assante Wealth Management.

Looking at 2014, I just want to go over some of the key highlights. We earned CAD1.85 a share in 2014, up 23% from CAD1.50 per share in 2013. This represented record profits for CI.

Our fourth-quarter earnings per share of CAD0.50 was up CAD0.22 from [CAD0.41] in the equivalent quarter in 2013. Our assets under management ended the year at CAD102.9 billion, up 13% over the year. Assante and Stonegate private counsel assets totaled CAD32 billion at December 31, up 11% over the year.

In 2014 CI recorded net sales of CAD3.9 billion, compared to CAD3.7 billion in 2013. The net debt of CI declined by 41% in 2014 to end the year at CAD185 million. And lastly, we were able to increase our dividend twice in 2014. We are now paying CAD0.105 per share per month.

And with that, I'm going to turn it over to Derek Green, president of CI investments to talk about our sales. Derek?

Thanks, Steve. As you heard from Steve, 2014 was an exceptional year. At CAD14.4 billion, our gross sales were the highest in history of the company.

Our full-year net sales not to put too fine a point on it were actually CAD3.99 billion, up 7% over 2013. And 2014's net sales were the highest in over a decade. Since 1994, CI achieved positive net sales in 88% of all quarters.

We continue to deliver excellent long-term performance numbers with over half of our long-term AUM in first or second quartile over one, three, and five years. 76% of our long-term AUM is first or second quartile over 10 years.

Our managed solutions or our fund-to-fund structures continued to deliver excellent results with 100% of the AUM in first or second quartile over 10 years. And we continue to have the most four and five star morning star rated funds in Canada. We also continue to invest in the CI brand and deliver premier advisor educational events.

We have a constructive view on regulatory reform. Change does not need to be bad or negative. In fact, it can be quite positive. Over the past three years of creating awareness on regulatory reform, we're seeing a shift into more fee-disclosed business. In fact, last year our sales growth was 4% of our total AUM. And when you look at our high net worth, or our mass affluent product, 29%; we had 29% sales growth. Today 27% of CI's AUM is now fee disclosed.

I'd now like to pass over the presentation to my colleague, Steve Donald. Steve?

Thanks, Derek. I'll just take a few minutes to touch on our advisory business. Let me start by saying that 2014 has been the best year yet at Assante Wealth Management.

Assante includes our private counsel business, Stonegate private counsel, and our securities and mutual fund dealerships, Assante capital management, and Assante financial management. I say best ever, as we've reached a record asset level of CAD32 billion at December and have hit record net new business numbers for the second year in a row.

Our net sales numbers for 2014 are up 55% on a year-over-year basis compared with 37% for the overall industry, as represented by the net sales analysis prepared by IFIC. I attribute the success that we're having in attracting new clients to our advisor model. For the most part our advisors at Assante and at Stonegate private counsel embrace a well diversified or managed money approach to managing our clients investments. What we've seen is advisors that utilize individual funds [ETFs] or other higher volatility products are left scrambling when the recommendations turn.

Think resource picks, gold picks, hedge funds, and the performance that we've seen recently in those. And that creates administrative work as they reposition portfolios, explaining changes to the portfolios, and filling out paperwork, as opposed to focusing on delivering value to their clients.

A broader, more complete approach to managing a client's financial well-being is really at the heart of our strategy for growth at Assante. Investing in advisors growing stronger businesses through development of our wealth planning capability to complement the capabilities of our advisors and delivering that complete wealth management service to their clients.

In addition to continuing to develop stronger and stronger wealth planning expertise, we're investing in technology, investing in branding. Technology hits on a couple key priorities. Being prepared for the regulatory changes that are now law and anticipating the requirements that may be coming down the pipe. Now, I'll touch on that in just a second.

Technology, it's also critical in dealing with increasing risks around information security. Clients have an increasing demand for access to their information on their own schedule. And certainly, technology is the backbone to provide that access.

Operating on a single platform addressing security concerns on information transfer is critical because trust is the very foundation of our business. So speaking of trust, let me briefly touch on the regulatory environment. Not a lot's happened during the last quarter with possibly the exception of three things.

First, the CSA has agreed to an extension of an element of CRM2, the 2015 requirements. And they're looking to extend the implementation of that out to January 1 of 2016. That relates primarily to the provision of position cost for clients. The positive I take from that extension is that it seems to show a better understanding of how clients relate to their accounts, primarily on a calendar year basis. The July 15 implementation timeframe seemed very arbitrary. Having said that, we're not anticipating an extension to the final phase of CRM2 in July of 2016, as it relates to the implementation of cost disclosure and performance reporting.

The second thing that came out during the quarter is the UK released its first post-implementation review of the retail distribution review, or RDR, in the UK. And it drew three broad conclusions. First, excess advisor capacity was removed from the system. The number of advisors declined. Part-time advisors that couldn't clearly articulate their value left the business.

Secondly, smaller accounts were indeed disintermediated. And that could be by choice, they saw what they were paying to their advisors, thought they could do better themselves; or they could have been pushed out as the element of cross subsidization left the business. But I think, most significantly, they found that there was a significant decline in the distribution of relatively high trailer-fee products when those trailer fees were un-embedded.

Couple that with the third thing that happened and that's the OSC commencing its three projects, mystery shopping, fund flows versus compensation levels, and commission structures or compensation structures versus long-term outcomes. I think the most significant of these projects is the fund flows versus compensation levels. Because we believe there is an effort to Canadianize the results that were found in the UK post-implementation review, with regard to the significant decline in high-trailer products, which would support a position of potentially banning embedded compensation as we move forward.

While it is absolutely uncertain as to whether this approach will be taken in Canada, we feel there's no downside to anticipating this outcome as it relates to helping advisors position their practices for the future. Focus client discussions on the value delivered for the fees charged, and then whether those fees are charged directly by the dealer or embedded in manufacture products, the point really becomes moot.

Let me say, at Assante, growth has allowed us to continue to invest back into the business, which further sets us apart from our competition and positions us well in this rapidly evolving regulatory landscape. As I said, 2014 has been our best year yet and early indications are that 2015 is shaping up well for us. We saw the potential for change in our business. We set about to position our advisors to deal with it. And we're now looking forward to reaping the benefits of that change.

So with that, I will turn the floor over to Doug Jamieson to speak more of our financial results.

Thank you, Steve. This slide of financial highlights compares the fourth quarter of this year with the fourth quarter of last year. You see average assets under management were up 14% from CAD88.6 billion a year ago to CAD101.1 billion. Next, net income, as Steve said, CAD140.4 million. And that was up 21% from CAD116.2 million last year, and on a per share basis up to CAD0.50 from CAD0.41 last year. And that's an increase of 22%.

Now these numbers include a CAD5 million fair value adjustment to the contingent consideration related to the purchase of Marret last year. We had initially provided for CAD12.5 million at the time of purchase and have now revised our estimate to CAD7.5 million. We are pleased with the performance at Marret. However, the contingent consideration is leveraged to the amount of EBITDA generated at Marret, which is dependent on level of both revenues and expenses in that business.

Next, we have EBITDA per share, which was up CAD0.10 to CAD0.820, a 14% increase, in line with the change in average assets. Dividends paid were up 10%, as CI paid out CAD78.1 million last year and CAD86.3 million in the fourth quarter this year.

Long-term debt declined from approximately CAD500 million last year to CAD308 million this year, as CAD200 million of debt matured in December and we used a combination of cash on hand and our credit facility to meet that maturity payments. At year end, we were drawn CAD8 million on the credit facility.

And net debt has declined CAD130 million, from CAD315 million at the end of the fourth quarter of 2013. At the end of 2014, it was approximately CAD185 million calculated as the gross public debt outstanding of CAD300 million plus the CAD8 million drawn on the facility left CAD123 million of excess cash and marketable securities. This gives CI a net debt to EBITDA ratio of 0.2 to 1. And that continues to provide CI with its significant financial flexibility.

Now, we can take a quick look at quarter-over-quarter highlights. Average AUM was essentially flat at CAD101 billion. Net income up 4% from CAD135.1 million to CAD140.4 million. And the CAD0.50 of earnings per share was up 4%. And removing the fair value adjustment brings net income essentially flat to last quarter in line with the change in average AUM.

EBITDA was also flat at CAD230 million, but increases from CAD0.81 per share to CAD0.82. Dividends paid of CAD86.3 million was an increase of 1% from CAD85.3 million last quarter. And during the quarter, net debt declined by CAD35 million.

Looking at CI's EBITDA margin, it's held steady at about 48% over the past couple of quarters. This reflects that even as CI's average management fee rate has declined with the mix of business, we're still generating CAD0.48 of EBITDA profitability on each revenue dollar.

CI's asset management margin measures how much we retain out of management fees after paying trailers, SG&A and DSC on a trailing 12-month basis within the asset management segment. We see that we are left with over CAD42 of every CAD100 in management fees earned, up from about CAD40 one year ago.

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

Next, CI's SG&A, calculated as a percentage of assets under management and shown here in basis points, has declined significantly from the fourth quarter of last year. We saw on the quarterly highlights slide that CI's average AUM grew by 14% from last year. At the same time, SG&A spend grew by less than 6%, so we see the drop from 37 basis points to 34 basis points year over year.

And here is the other new performance measure we introduced in 2014, the SG&A efficiency margin, again, measured on a trailing 12-month basis within the asset management segment. And here we look at an available pool of management fees, less trailer fees and DSC, and how much of that pool remains after we deduct the SG&A spend. In the last 12 months, CI has retained 71.5% of that available pool up from 69% one year earlier. So 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. And we see a leveling of free cash flow of CAD148 million from last quarter and an increase of CAD24 million from the fourth quarter last year. This year will be an increase as a result of operating cash flow growing by more than CAD16 million. And we spent about CAD8 million 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 level of free cash flow for last quarter and this quarter. Both quarters with very similar operating cash flows at CAD172 million and CAD173 million, less commissions of CAD25 million and CAD24 million providing CAD148 million of free cash.

The next section details the amounts returned to shareholders. We repurchased CAD38 million worth of stock in the fourth quarter, down from CAD56 million last quarter. And the dividends paid increased slightly from CAD85 million CAD86 million. This net surplus of CAD24 million, plus a decrease in the amount of working capital and other items required, is what reduced net debt by CAD35 million in the quarter.

We continue to highlight CI's Return on Equity, which hit 28% this quarter, and is another indicator of the strong performance at CI. This return has grown over the past year from 24% as CI leverages the growth in its AUM to earnings growth and CI's limited need for additional capital to support that growth. And this chart of CI's annual dividends paid since 2010 shows a compounded annual growth rate of 11%.

I will now turn it back to Steve.

Thank you, Doug. Just bringing us to being a little more current. This chart depicts our growth in assets under management starting in July of 2013 right through to yesterday. I think what's important to point out here, is that our current assets of just over CAD107 billion are up 6% from our Q4 2014 average giving us a good start to the FY15. Looking forward, as I mentioned, our assets are well ahead of levels that they were at year end, creating a positive investment environment so far in 2015.

When we look at what products are selling, investor interest in equity-oriented investments continues to have a high profile amongst CI sales. I talked about good market performance and positive for sales, but from a perspective of running our company, we're going to continue to focus on preparing advisors for regulatory change.

We continue invest heavily in our comprehensive service model and investing in adding to our money-management depth and diversity. We believe the environment today is as positive today as it was last year for profitability and dividend growth, share buybacks, and debt reduction for CI.

And with that, I'd like to say thank you and open the floor for any questions you might have.

Thank you very much.

(Operator Instructions)

[Garry Ho].

Thanks, I just wanted to ask, given that we're approaching mid-February, just wondering if you can provide an update on how net sales are tracking so far this year? I know you pointed to plus 6% AUM growth, I just wanted to dig a little bit deeper in that. And some more color around the popular products other than one that you just mentioned?

I would say in terms of the start to the year, a little softer. We've had some rebalancing of institutional accounts. January is not one of our best months because you have the 10% DSC free, you've got RRIF payments, and then you've also got fees coming out from some of the GMWB, or the insurance products.

In terms of popularity of products, as Steve said, we continue to see interest in equities with the Canadian dollar selling off relative to specifically the US dollar. We're seeing interest in, obviously, non-Canadian global and American products. If you look at where we are seeing the biggest growth though are managed solutions which is not surprising. It's really growing quite quickly in industry. But our high net worth or our mass-affluent and fee-disclosed product is growing at a phenomenal rate. And then, again, the managed solutions are very strong as well.

Okay, great. And then moving on to the average management fee, it's down year-over-year and sequentially. I think was referenced a change in asset mix.

So it sounds like this trend may persist as more advisors change to fee base and as clients move towards, like you said, more high net worth products. If you can help me think this through, if this trend continues, say, over the next five years or so with AUM continuing to grow, where could this average management fee level out? Or how should I think about that?

We expect that this trend will continue. We may see an erosion in the top line, of up to a basis point a year. But if it's a result of new clients coming in and assets growing, it will be offset by the operating leverage we get and reduction in SG&A.

The one thing I would add is, to Doug's comments, Steve touched on this in his presentation -- Steve Donald, we don't think there really is any downside to anticipating regulatory reform and change. We are spending a tremendous amount of time and resources helping advisors transition their business to deal not just with CRM2, but what we believe that will potentially happen with 81-407 and the un-bundling of the MER.

And because of that, we're seeing low growth in our traditional class A business and much higher growth in F, I, O. It's sort of the, go through the vowels. But we're seeing in fee-disclosed and lower -- it's lower management fee. We're taking -- there's some margin compression. But these type of programs, advisors tend to consolidate with one provider. We're seeing -- and we're seeing bigger tickets too, so it's incremental growth.

Okay, great color. And then, just lastly on acquisitions, has the activity level or discussions changed since the last three to six months? And can you give us an update on this and remind us what size geographies you'd interested in and other financial hurdles, please?

Sure. I don't think the number of discussions ever changes. It's just what's available and what do you want to do. When you look at it from CI's perspective, we're pretty picky about what we want to pick up. We're not desperate to add assets just to get economies to scale. We're the best in the business at economies of scale already. So the marginal gain on that for us to take what I'll call, say, an undesirable asset on just to get an extra CAD18 billion to CAD20 billion in assets has no logic.

For us to make an acquisition, it really has to fall into an area where we see it adding long-term value for us. And what I have discussed in the past is that we would see maybe smaller a opportunity, [US asset] as interesting. We're not interested in making multi-billion dollar bet into the US. We've seen how that can turn out very negatively in many cases. But if we saw a small opportunity with a more boutique money management firm that had some distribution connections in the US, but also had a product line that worked for us, we'd be interested. And whether that was CAD100 million or even up to CAD800 million, CAD900 million, I think that's easy for CI to absorb at any time. As Doug pointed out, we're going to soon be debt free at CI at the rate we're going.

So we have a lot of capacity to do what we want to do. I think it's basically, we're seeing lots of things that could be done out there, but not necessarily that attractive to us. They could be attractive to someone else, just not attractive to CI.

Okay, thanks for the color.

Geoff Kwan.

Hi, good afternoon. The first question I just had was you've been using a lot of the excess free cash flow to buy back shares. I recall, I think you had talked about previously potentially looking at increasing leverage to do things like share buybacks. Is that something that may potentially play out to some degree over the next 12 months?

Geoff, we're opportunistic buyers. And we picked up a lot of our shares on our buyback in the fall time when a good-sized block basically came out. And we got it at a very attractive price. And I don't think our position has changed at all.

The interesting thing is when we look year-over-year, our stock price is actually down, but our earnings are up over 20%. Our assets are up 16%, 17%. So the valuation change on our Company is over 20% in the space of a year. So clearly, we look at today's levels and find it. There could be attractive opportunities to buy back our shares here.

Absolutely. So, I would agree with you that I think what you're talking about is when we said over a five-year plan -- or five years, if we decide to move our leverage back up, and if you looked at the amount of free cash flow after allowing for a reasonable growth in dividends, we should have about CAD2 billion. And our expectation would be that after five years we don't have CAD2 billion in cash sitting on the balance sheet. Let me make that perfectly clear.

Okay. Just the other question that I had was just the discussions that you guys that have with advisors across the country, can you talk about any sense that you get in terms of either stuff like cash on the sidelines or stuff that's getting put into GICs? And how that might have changed, say, over the past few months with what has been going on with oil? But even maybe even over a longer time period. Essentially just trying to get a sense of is there potentially some potential upside for sales, if people get more constructive and want to put even more money into investment funds?

It's Derek, Geoff. I will answer first and then Steve Donald can talk about Assante specifically. If there's any effect on our sales, it comes from the markets. When the markets misbehave, and we saw this in the fall after Q3 ended and the market -- the volatility in the credit markets and the bond markets and equity and currency, it certainly adds an effect. I think people that recognize we're very close to the sixth anniversary of the start of a tremendous bull market. I think advisors are tempering their clients expectations right now. We're not forecasting a pullback or a bear market, but I think people are really being careful right now about where their allocating money.

I don't know if you have something you want to add to that, Steve? If you think there's a bunch of money on the sideline that might come in?

I look at the Assante channel, as I mentioned in my remarks, our model is more [along] a diversified portfolio or managed products. We don't see a dramatic shift based on individual market movement or timing. We haven't seen a large accumulation of cash across the Assante portfolios. Simply, because of the focus on a broader managed approach and looking at asset allocation decisions in that. So we have gone -- we've probably reduced our equity position by about 3% or 4%, but nothing significant.

Okay, great. Thank you.

Paul Holden.

Thank you. Good afternoon. Wanted to ask a question on the portion of AUM that's fee disclosed, and maybe remind us of how you define fee disclosed?

So, really, it's going to be anything but class A or class E, which is embedded. It's fee disclosed or transparent. Right now we're, as Steve said, CAD107 billion in assets. We have about CAD72 billion in class A funds. 27%, 28% would be fee disclosed. It's a large number relative to the rest of the industry. And the one message that I would say for the last 3.5 to 4 years between Steve Donald at Assante and myself at CI, we've been talking about regulatory reform and really the importance of transitioning -- advisors transitioning their business.

So I mentioned earlier, if you look at our traditional class A business, which is the biggest driver of earnings for us at CAD72 billion, think about that's only growing at 1.8%. That grew at 1.8% last year. If you look at PIM, which is our mass affluent or our high net worth, it grew at 29%. The net sales grew at 29% relative to its AUM. And our managed solutions, which are CAD32 billion of our CAD107 billion, that grew at 11%. So advisors are transitioning. They're segmenting their clients, and they're putting their higher net worth -- they're anticipating regulatory change. So hopefully that answers the question.

It does. It does answer the question. Just maybe one specific request on that topic would be the AUM in F class funds in particular?

You know, I don't have the number off the top of my head. We've made an adjustment to our peer F class. We've come up with something called EF, which is an Enhanced F, where we actually give a price break as they go through as they get to CAD100,000. That will specifically be good or positive with IIROC advisors, or MFDA dealers that have fee-based platforms.

If I could just add a comment, Paul. It's Steve Donald, as I mentioned, we look to the UK in terms of their experience there. And one of the reasons that we focus collectively on fee-disclosed assets is because in the UK, as you know, they've banned embedded compensation. But they do allow the manufacturer to collect the dealer service fee on behalf of the dealer. So where that fee is disclosed in CI products and there -- we would anticipate in the future where there's an explicit negotiation of that fee. Fee disclosed becomes important metric as opposed to simply F or EF. It provides the road map for the future.

Understand. And your views, [just still that] a good amount of the industry at least at the MFDA level doesn't have the capabilities to collect such a distribution fee? Is that correct?

That's our understanding.

Okay. I wanted to ask you on the outlook for cost inflation. Obviously, saw quite a big growth in cost and SG&A in 2014. What's your ability to slow that growth rate down if we have a more challenging market through 2015?

Paul, it's Steve MacPhail. I didn't think I would ever have to justify that to you guys. People know we can do that when we have to. We watch our costs pretty closely. And it's always a topic around here that if things went flat, what will we do, where will we make changes? And of course, there are variable compensation things that we can deal with. And we would just make those changes if we had to. We would just continue to find better ways to do business. But there are critical parts of the business that we're going to continue to invest in like our service models, et cetera.

But I don't think I would look at it and say, just because our cost went up 6%, that was against 14% asset growth. So we had lots of capacity to reinvest in the business. And that's what we do at CI, when we get -- when there's a good tide coming in, we take advantage of that to build our business. And then when we have to tighten up, we do it. But we've always moved ourselves two steps forward, maybe when we have to pause.

Okay. Specifically then, on the types of investments you have to make towards CRM2 as we head towards 2016. How far along do you think you are in terms of making those investments, particularly on the technology side? And how material do you think that is relative to your cost base?

It's not material to our cost base on it. Like any other project that we have to get done, we will get it done. We've been on top of this from a project management perspective. If guidelines were relaxed, that's fine. But we're not dependent on -- we're not counting on guidelines being relaxed. And we've gone about this by end of the project. And we're doing it very cheaply. If you sat down and talked to, Dave Pauli, our Chief Operating Officer, I'm shocked at how cheap he gets these things done somehow.

Okay. Thanks for your answers. That's all the questions I had.

[Graham Ryding].

Hi, good afternoon. I just wanted to follow up on the regulatory topic. There was good disclosure there; appreciate that. If we do follow a similar path and truly conditions are prohibited, your reference to you don't think it's going to be necessarily a headwind, are you referring to Assante and CI in particular? Or is that a reference to the industry overall?

No, it was -- it's Derek Green -- so I would say that we have a different view from what I understand from some of our clients whether it's MFDA dealers that are in consultation with other presidents of fund companies. I've been told that our view on regulatory reform -- not CRM2 because CRM2 is law, but on things like 81-407, which is not just the banning of trailer fees. That's not what this is. It's the potential discontinuation of embedded compensation. And as Steve said, we don't really see any down side to anticipating this change. My understanding is from our supporters that our competitors are saying -- oh, it's going to happen, but it's way, way out in the future. Well, we're not so sure that it's way, way out in the future.

So if you look at where we're focusing our resources and our tools and really, dollars to spend on advisors, it's doing workshops, and it's doing presentations, and really helping them change how they do business. From what I'm told, again from our supporters, there's nobody else that is doing that work. And I think that ultimately that helps us grow our business. Money will move from weak hands to strong hands in this changing environment. It doesn't have to be a negative.

Advisors, I've said to people, you have a much easier time of this than we do, and they usually raise their eyebrows. They have free will on whether they want to change how they've done business. We have 42,000 advisors that we dealt with; individuals advisors we dealt with last year. I can't force them to change and evolve. But it doesn't have to be a negative. And we're actually trying to make this a positive and really differentiate ourselves from our competition, if that makes sense.

Yes. That does. That does clear things up. A quick question just on the Sun Life channel for you guys in particular. Any update there on if you have noticed any market share loss with Sun Life's push into its own proprietary product?

Sure, it's Derek again. The business has been very strong. We're incredibly proud of the results that Assante had last year. The business grew. You heard what Steve said, how much it grew.

Actually the business, the Sun Life business, both gross and net was up more with CI last year than Assante was. So the end of the distribution agreement, it came and went. I think people were anticipating a shoe dropping. We haven't heard anything. They're still great clients. We continue to focus on our preferred partners whether its Assante or Sun Life. They're terrific partners.

Great. And then just one last one if I could. The fair value adjustment related to, it seems, Marret, was that a reflection of AUM levels declining or being lower than what you had originally targeted? Or is just the EBITDA that's coming from that business being lower than what you targeted?

It's primarily the EBITDA being lower than what we had targeted in our models. As I said, it's leveraged to the amount of revenue being generated and the level of expenses. It's a fairly short model, so it's quite sensitive in first year.

Okay, that's great. Thank you.

(Operator Instructions)

Scott Chan.

Good afternoon, guys. Maybe for Derek, just maybe on the Sun Life. What's the traction or recent traction on seg funds. And then, on top of that just is there any additional demand for the g520 product? I don't think we've got an update on that for a while.

In terms of segregated funds in general, the sales haven't picked up or really gone down dramatically. If you look at g520, we continue to see interest in the product. We're up to around CAD300 million in g520. It's a guaranteed product.

Personally, I think it will gain traction when the markets misbehave. If we see a rollover in the markets, more people want a guaranteed solution. So in terms of segs, I've mentioned this before, we were very successful in the mid-2000s, 2006, 2007, 2008. And when the global credit crisis or financial crisis came along and interest rates plummeted and volatility went up, features and benefits were clawed back. And I think segs have probably seen their best days in terms of sales standpoint.

And then, Derek, we just saw TD launch some series D, do it for your own investors product, is that something CI has considered at all?

We have been approached on that before. My feeling is that there's a couple of things, there's lots of things that we stand for. We believe in active management, and we believe in active advice. Advisors are the people that we partner with. I don't ever intend to compete against advisors for their clients' business. And where this becomes a bit of a sticky wicket is not when the markets up 20% or 30%, and there is nobody questioning the value advice.

But if the markets were to go down 15%, 20%, 30% and a client could get a 75 basis point break on the same fund that they could get from CI, the money could move from being with an advisor that's supportive of CI, to a D class unit without it deemed disposition, without a tax consequence. And to me, I don't ever -- and I believe I speak for the rest of Senior Management -- we don't ever want to be in competition with the advisors that have helped us build our business.

Okay. And then the just the last question for Steve Donald. You mentioned Assante net sales were up 55% year-over-year. Can you give us a sense of how much net sales Assante brought in?

Sure, Scott. It was in about the CAD1.2 billion range.

CAD1.2 billion? Okay, perfect. Thanks a lot.

Thank you. There are no further questions registered at this time. I would like to turn it back over to you.

This is Stephen MacPhail. On behalf of myself, Doug, Derek, Steve Donald, I just want to say thank you very much for tuning in to our quarterly results and for all the great questions. We'll talk to you in three months. Bye, now.

Thank you. The conference call has now ended. Please disconnect your lines. Thank you for your participation.