Investors Group Inc. is reporting an increase in profit for the third quarter ended September 30. The fund management firm says that recovering financial markets were responsible for the rise.

“The strength of financial markets over the past year has provided clients with attractive returns and contributed to stronger financial performance by the company,” said Jeffrey Orr, president and CEO of Investors Group Inc., in a news release.

Net income was $160.6 million, or 53¢ a share excluding a dilution gain of $14.8 million, up from $129.8 million, or 47¢ share, a year ago.

During the quarter, IG purchased $100 million of common shares of Great-West Lifeco Inc., which were issued as part of the funding of the Canada Life acquisition by GWL.

IG’s percentage ownership of GWL was slightly reduced to 4.2%, resulting in a dilution gain for the quarter of $14.8 million.

Revenues for the third quarter were $474.4 million, unchanged from the prior year. Operating expenses fell 2.3% to $258.7 million.

Client assets under management and administration at September 30 climbed to $76.3 billion, compared to $73.4 billion a year ago.

Return on average common equity for the nine months, excluding the dilution gain, was 18.7% compared with 19.6% for the same period in 2002.

Investors Group recorded mutual fund sales of $888 million for the third quarter, compared to $964 million in the prior year. For the quarter, mutual fund net redemptions were $283 million compared to net redemptions of $216 million in 2002 and net redemptions of long-term funds were $276 million compared to net redemptions of $220 million in 2002.

Redemption rates (excluding money market funds) were 11.4% at the end of the quarter, up from 9.6% at the same time last year.

Mackenzie recorded sales of mutual funds of $1.1 billion for the quarter compared to $1.2 billion last year. Mutual fund net redemptions for the period were $39 million, compared to net redemptions of $101 million in the prior year. Net sales of long-term funds (excluding money market and managed yield funds) were $17 million for the period, compared with net redemptions of $83 million in 2002.