Source: The Canadian Press

AGF Management Ltd. (TSX:AGF.B) says its second-quarter profits rose nearly 60% and revenues climbed higher, even as the mutual fund and investment management firm faced another round of global market volatility.

The Toronto-based company said profits were $27.5 million or 30 cents per share for the three months ended May 31, up from $17.2 million, or 19 cents, a year earlier thanks to higher investment management operations revenue as global markets improved and a decline in loan loss provisions.

Stripping out a one-time accounting charge related to Smith and Williamson Holdings, a U.K-based investment manager in which AGF holds a 30.5% stake, quarterly profit was $31.5 million. Revenues were ahead 7.2% to $153.8 million from $143.5 million.

“Our AUM and profitability increased year-over-year with strong interest from institutional clients and improvements in market and economic conditions,” said chief executive Blake Goldring.

Goldring said the European debt crisis and related concerns about the strength of the global economic recovery were factors weighing on the company’s outlook.

AGF said assets under management rose 14.6% to $42.9 billion from $37.4 billion in the same period of 2009. Institutional and high net worth assets under management were ahead 30.3% to $21.5 billion from $16.5 billion.

Mutual fund assets under management were up 2.2% to $21.4 billion, also thanks to market improvements.

Mutual fund net redemptions ran much higher to $477 million from $125 million a year earlier but AGF said it is “confident that our current product and sales initiatives combined with our commitment to strong long-term investment performance will reverse the redemption trend.”

AGF Trust, the AGF division that provides mortgages, investment loans and term deposit products, saw loan assets drop 17.6% year-over-year to $3.4 billion, but profits rise 67.1% as provisions for loan losses were far lower.

The company noted that AGF Trust’s real estate secured loan assets declined 31% over the previous year and investment loans declined 6.9% under AGF’s plan to slow loan growth and improve its regulatory capital position during the recession.

The trust operations, however, provided 25.3% of the company’s pre-tax income during the quarter.

Shares in the company were up three cents at $14.75 in midday trading on the Toronto Stock Exchange.