Who will win the race for next junior "major capital player"-AGF,Tiera or Guardian Capital

       Back in 2017 and 2018 I decided to make a fictitious race or challenge  between 3 junior financiers The three were Fiera Capital,AGF Management and Guardian Capital.The 3 were quite different in substance and style.Fiera was largely Quebec based with strong connections to the National Bank.AGF was broader based but with a smaller  number of marketable assets(mutual funds). It had a small number of company mutual funds:Guardian Capital had a larger market cap with it's biggest asset being about $25 million in BMO stock.But which one would be closer to being the next major junior capital player?I decided back in 2018 that the winner would be AGF Management for a number of reasons. 

    Guardian Capital 

  Guardian Capital was actually eliminated from the race.Although it's value or market cap was by far the biggest and hence the winner it had become a subsidiary of BMO and hence considered not elgible for this challenge.When the challenge started Guardian held about $25 million in BMO stock.Then it was trading at about $25 per share.BMO decided that they could sell more mutual funds by acquiring the asset manager, namely Guardian Capital.Guardian became a full subsidiary of BMO and no longer be elgible for our challenge                                                                                                                                  .It was now between Fiera and AGF.Fiera was active but continued to dilute earnings in order to increase total Assets under Management.But AGF used it's trained marketing team to build it's AUM.Furtermore AGF had traded in the $6-$8 price range in 2018 -2019 but now traders had bid the price up to$14 a share.Whereas Fiera stayed in a tight trading range around $6.

  Fiera Capital

   Fiera Capital has about $160 billion in assets under management.It will likely be in the top 3 junior, independent financiers in Quebec.And it just got another $600 million invested by an association in Quebec.But in Q2 net earnings decreased from $10 million to $5 million.And furthermore in Q2 it acquired all the equity in Fiera held by a Desjardins subsidiary.It intends to acquire not to be acquired.It may be second in the challenge but a fairly close second.

 Summary

  First, Guardian Capital had strong connections to BMO back in 2018 and since then it has increased. BMO has paid it a lot of money to manage all  it's mutual funds for BMO.Guardian Capital is hence no longer an independent junior finacier.Whereas Fiera Capital is the opposite.It had a lot of equity in it from Desjardins Investnents and paid back the equity.It believes that it can do well on it's own and it does have the largest amount of AUM of the three.It also has strong connections to other major players in the Quebec scene.Look for Fiera to be one of the very top independent players in Quebec as well as a medium sized player in Canada.It's price could stay in the $6 area but a small to medium sized acquisition could make it jump to $10 a share.This player could easily  be one of the large mid-sized financiers in Canada in 5 year's time.AGF is also emerging from it's junior status.For example AGF now  has a net worth of more than 50% of Laurentian Bank and almost a third of EQB bank.One medium-sized acquisition would make AGF only slightly smaller.One,but maybe both,of these large juniors could be the next major, junior capital financier in Canada. Look for AGF to trade in the $!2-$13.50 price range for the rest of 2025.            

Dale Mcintyre is a freelance writer that writes for several websites including Zacks Research,Masrketbeat.com and Yahoo Finance.He obtained his degree in economics a la universite d'Ottawa.
 

Looking for a Financial ETF?Which do you prefer HCAL or HMAX?

 Both HCAL and HMAX are fairly new ETFs.All of their assets are connected to the Canadian big 6 banks and a few large insurance companies.But their connection to them is quite different.HMAX is a covered call ETF while HCAL purchases varying amounts of the underlying assets.

 HMAX is Newer

HMAX has only been around since 2010.And it has got a fairly new and modern investment strategy.It puts 30-50% of it's investment funds into covered calls.This means that the fund sells it's stock as an option and picks up the premium on it's stock as income.But only 30-50% of it's shares become a written option.This gives HMAX more income and it has  a quite high dividend.For example, the present dividend  is 13.59% when 6% is considered a good,healthy dividendWhile it's annual return is a modest 25.90%.It's a juggling act.

  Covered call ETFs is a fairly new instrument.But they are becoming more popular.As the money obtained from the option boosts their income as well as their dividend.Consequently covered call ETFs have a dividend usually quite larger than an ordinary ETF.However the stock price on the portion which has a written option is constrained by the premium on the covered call.Only the unconstrained part of the ETF is able to get the growth in the value of the stock.It is up to the investor to find out what percentage of the ETF is tied down with a written option.Some ETFs reduce potential growth in order to increase income available for dividends.

HCAL has an excellent Performance in 2025

 HCAL uses 100%  of it's funds to buy the underlying assets.And all of these assets are either from the BIG 6 Canadian banks or very large insurance companies like Manulife.As the underlying assets go up in value, the value of HCAL  goes up.Last year HCAL had an annual return of 45%(including dividends).Considerably better than that earned by HMAX.And HCAL has had a recent surge as the Q2 financial reports were,on average, better than expected. but not by as much.And yet the surge has also brought HMAX up in value.

    Going Forward

 It seems logical that the performance in the second half of 2025 should be the same as in  the first half.But the rather stellar performance of HCAL came as a result of the robust performance of primarily 2 banks,namely the TD Bank and the Royal Bank.Although BMO,Scotiabank and CIBC contributed also.It appears to this blog that the business cycle is winding down gradually and the banks will be affected albeit only slightly.For example,Statistics Canada which this blog considers quite reliable forecasts economic growth in Q3 and Q4 at 1 to 2% and then gradually moves up to higher growth rates in 2026.                                                                                                                                       The drop in momentum may shave the earnings especially of the two big gainers -TD and Royal Bank.However look for earnings to drop for all 6 banks and this to cut into the growth of HCAL.While HMAX will have less of a drop and may use income from it's covered calls to raise it's substantial dividend.This will act to raise the price of HMAX which at present is about half the price of HCAL.In summary,both will perform well but it is likely that HMAX  will show greater positive changes.HMAX will fall less or maybe show a slight gain in Q3and Q4.HCAL could easily show a robust loss in Q3and .But in Q1 2026 or maybe Q2, HCAL will put forward bigger gains on the table. 

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Dale Mcintyre is a freelance writer who writes primarily for Zacks and Yahoo Finance.

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