Most read: AGF funds contacted WP to lay out the other side of the story on fund merger fracas.
This past November, AGF, in an effort to streamline and simplify the company's product offering announced several changes to its product line, including a merger of the AGF Social Values Balanced Fund into AGF Traditional Income fund and the AGF Social Values Equity Fund into AGF Global Equity Fund.
Some advisors claimed clients were surprised to find non-SRI holdings in their funds. The story of the merger gained some traction in the advisor-focused media in Canada as a result.
But the early reports may have been unduly harsh. There are two sides to every story, of course. And there here as well.
To the credit of AGF the company recently reached out to Wealth Professional to paint a more complete picture of the incident. The company, rightly, points out, that vote on the two mergers was overwhelmingly in favour, that the mergers were perfectly above-board and carried out according to regulations. A spokesperson for AGF (working for an outside firm) wondered “where the complaints came from…This wasn’t some kind of dark and sinister plot,” said the spokesperson. “There was concern this was the perception. The intent was absolutely above-board.”
AGF followed up with an written response from Gordon Forrester, vice-president, head of retail, product and marketing. The text is below. If there is a lesson drawn from this by WP: Advisors need to pay attention to company communications. That is, advisors have to go through and understand what is in all those printed pages sent in the mail. As a commenter on the original WP story pointed out, “This was all communicated.”
The official AGF response makes that clear, points out that the OSC cleared all of this, notes the overwhelming nature of the votes:
“The decision to merge the funds was taken after we reviewed our current line-up within the framework of investor needs, efficiencies and overlap/gaps.
We also recognized our long term involvement in the ESG and SRI space, dating back to our/Acuity’s involvement in the space since 1991.
Our merger process began with a review of investment objectives, asset class and risk levels. Based on these criteria, the mandates that were chosen for the SRI mergers were not SRI specific. As a result, we sought OSC approval and explicitly outlined in our communication to the OSC the differences in objectives. We were very transparent that the funds the SRI funds were transferred into were not SRI specific and had notable differences in the top ten holdings. The OSC reviewed and approved the mergers, pending unit holder approval. We held Annual and Special Meetings on April 9, 2014 and 97.3 % of unit holders voted to merge AGF Social Values Balanced into AGF Traditional Income Fund and 89.6% of unit holders voted to merge AGF Social Values Equity Fund into AGF Global Equity Fund.
As with all fund mergers, we had a detailed communications plan to reach out directly to advisors and their clients. The communications included a press release, advisor and investor letters, an advisor call and email campaign.
AGF remains committed to the SRI and ESG philosophy. We continue to participate in the RIA annual conference and our EVP of Retail Distribution sits on the Responsible Investors Board of Directors.
The Clean Environment Fund remains an important fund for AGF. We are in the process of adding an associate portfolio manager to support Martin Grosskopf and we have been actively marketing this fund to our clients.
AGF has been speaking with advisors that have concerns and are encouraging them to reach out to their AGF sales representative with any questions they may have.”
As the AGF spokesperson made clear: "If any advisor has an issue, please call AGF."
Some advisors claimed clients were surprised to find non-SRI holdings in their funds. The story of the merger gained some traction in the advisor-focused media in Canada as a result.
But the early reports may have been unduly harsh. There are two sides to every story, of course. And there here as well.
To the credit of AGF the company recently reached out to Wealth Professional to paint a more complete picture of the incident. The company, rightly, points out, that vote on the two mergers was overwhelmingly in favour, that the mergers were perfectly above-board and carried out according to regulations. A spokesperson for AGF (working for an outside firm) wondered “where the complaints came from…This wasn’t some kind of dark and sinister plot,” said the spokesperson. “There was concern this was the perception. The intent was absolutely above-board.”
AGF followed up with an written response from Gordon Forrester, vice-president, head of retail, product and marketing. The text is below. If there is a lesson drawn from this by WP: Advisors need to pay attention to company communications. That is, advisors have to go through and understand what is in all those printed pages sent in the mail. As a commenter on the original WP story pointed out, “This was all communicated.”
The official AGF response makes that clear, points out that the OSC cleared all of this, notes the overwhelming nature of the votes:
“The decision to merge the funds was taken after we reviewed our current line-up within the framework of investor needs, efficiencies and overlap/gaps.
We also recognized our long term involvement in the ESG and SRI space, dating back to our/Acuity’s involvement in the space since 1991.
Our merger process began with a review of investment objectives, asset class and risk levels. Based on these criteria, the mandates that were chosen for the SRI mergers were not SRI specific. As a result, we sought OSC approval and explicitly outlined in our communication to the OSC the differences in objectives. We were very transparent that the funds the SRI funds were transferred into were not SRI specific and had notable differences in the top ten holdings. The OSC reviewed and approved the mergers, pending unit holder approval. We held Annual and Special Meetings on April 9, 2014 and 97.3 % of unit holders voted to merge AGF Social Values Balanced into AGF Traditional Income Fund and 89.6% of unit holders voted to merge AGF Social Values Equity Fund into AGF Global Equity Fund.
As with all fund mergers, we had a detailed communications plan to reach out directly to advisors and their clients. The communications included a press release, advisor and investor letters, an advisor call and email campaign.
AGF remains committed to the SRI and ESG philosophy. We continue to participate in the RIA annual conference and our EVP of Retail Distribution sits on the Responsible Investors Board of Directors.
The Clean Environment Fund remains an important fund for AGF. We are in the process of adding an associate portfolio manager to support Martin Grosskopf and we have been actively marketing this fund to our clients.
AGF has been speaking with advisors that have concerns and are encouraging them to reach out to their AGF sales representative with any questions they may have.”
As the AGF spokesperson made clear: "If any advisor has an issue, please call AGF."
