AGF introduces low-load option

(January 11, 2005) AGF Funds has begun re-tooling its operations in an effort to reverse a lengthy spell of net redemptions. The first step, announced today, is a low-load purchase option on its mutual funds.

The change means there will be no upfront sales charge and a shortened redemption fee schedule (three years) on the bulk of AGF’s funds.

“The low-load option on our line-up of funds is one of the best of in the industry thanks to the flexibility and benefits it offers advisors and investors,” said Randy Ambrosie, AGF’s executive vice-president, sales and marketing. “Advisors now have more choice in building the best investment solutions to meet client needs.”

The low-load option is available on AGF’s entire line-up of more than 50 mutual funds, except AGF Managed Futures Fund and AGF U.S. Money Market Fund.

Investors who choose the new option will pay no commission at the time of purchase, but their advisor will receive a 2.5% commission paid directly by AGF, says Patricia Philliops, vice-president of communications. Investors are liable for redemption fees, but only if they hold the fund for less than three years.

The redemption fee is 3% for redemptions within the first year, 2.5% during the second year and 2% during the third year.

AGF also announced today that is increasing both the amount and the frequency of distributions on two balanced funds, AGF Canadian Balanced Fund and AGF Canadian Real Balanced Fund, effective January 31, 2005.

The distribution on the Canadian Balanced Fund, managed by Christine Hughes, will rise to 5% annually, and the Canadian Real Value Balanced Fund, managed by Keith Graham, will increase to 2%. Both funds will move to a monthly payout, rather than quarterly, providing income-oriented investors with a more predictable income stream, AGF says.

Today’s announcement is believed to the first in a series of initiatives that AGF is planning this RRSP season in an attempt to turn the firm’s fortunes around. AGF had net redemptions of $246 million in December, however total assets rose, thanks to solid performance in most of the firms’ funds.

“For the 10-year period ended November 30, 2004, 75% of mutual fund assets performed above median,” AGF said in a release last week. “Strong investment performance combined with gross sales and redemptions in December, 2004, contributed to a $533 million net increase in mutual funds assets as compared to November, 2004.”

Looking ahead, Ambrosie says he’s hopeful that this year will be a better one for AGF. “2005 is about delivering more products that will meet the needs of the unitholders when selected by the advisors,” he said in a recent interview with Darin Diehl, executive editor of the ADVISOR Group. “We do that day in and day out we believe that it’s going to generate great results. And then there will be a day when net redemptions will turn to positive net sales and that the effort will then emerge as having been victorious.”

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For more on Ambrosie’s plans for AGF, check out the premiere edition of Advisor’s Edge Report, due out later this month.

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Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com