Fiera Capital: Sub-Advisory Bleed Continues, But Private Markets and Cost Discipline Offer a Path
Despite another wave of outflows, the firm leans into its Global Investment Office realignment and Private Markets growth engine to steady the ship.
FSZ.TO · Earnings Call · 2026-08-07
A Quarter of Managed Adversity
Fiera Capital's second quarter of 2026 was another chapter in its ongoing fight to stem outflows from sub-advised mandates while pivoting toward higher-growth areas like Private Markets. Total AUM managed to rise 2.1% to CAD 163.5 billion, but that growth was entirely market-driven; net outflows remained stubbornly negative, led by CAD 5.3 billion in sub-advisory outflows. That said, the tone on the call was not defeatist — management highlighted improving investment performance and continued traction in the financial intermediary channel as evidence that the strategic reset is working.The outflow story is a familiar one. “The second quarter was challenging from a flows perspective as we experienced larger than expected outflows from our sub-advised mandates, along with elevated client rebalancing.” — Maxime Ménard, Chief Executive Officer · 2026-08-07 That guidance was pre-announced, but the magnitude underscores how dependent Fiera remains on a shrinking pool of legacy mandates. Management confirmed one more direct transfer of roughly CAD 1.5 billion to PineStone in H2, plus an additional CAD 500 million equity redemption from a separate client. As CFO Lucas Pontillo explained, “we feel very comfortable going into the third and fourth quarter relative to our leverage position.” — Lucas Pontillo, Chief Financial Officer · 2026-08-07 That comfort is buttressed by a targeted cost program. The strategic response is multi-pronged. Fiera aligned its Global Investment Office across both public and private markets, aiming to foster multi-asset collaboration. It also appointed Nick Smart as lead PM for Canadian Large Cap equities, following a conduct-related action that management framed as protecting platform integrity. On the growth side, Private Credit and real assets continue to attract institutional capital, and the new note feeder for life insurers has gained early traction. Maxime Ménard pushed back on the idea that private markets demand is cooling: “There hasn't been a huge movement away from Private Markets. Quite the opposite.” — Maxime Ménard, Chief Executive Officer · 2026-08-07 He pointed to real assets and private credit as the preferred allocation venues, while acknowledging a "pullback" in retail appetite. Investment performance showed a "meaningful improvement" across several key equity strategies. Large cap equities outperformed benchmarks and peers in the period, emerging markets delivered another quarter of top-quartile returns, and fixed income saw 91% of AUM beat benchmarks over one year. That is a notable contrast to the previous quarters where performance lagging drove outflows. While the firm acknowledges the quality-focused equity platform had struggled, this quarter's results provide a foundation to rebuild client confidence. Financially, Fiera is managing expectations. Revenue fell 5% year-over-year to CAD 155.1 million, but SG&A excluding share-based comp declined 5.5% YTD, keeping adjusted EBITDA margin stable at 27%. Net debt rose to CAD 723 million (3.8x EBITDA), largely from the purchase of the remaining stake in Fiera Infrastructure, but Pontillo signaled a decline in H2 as cash collections pick up. “On a year-to-date basis, we were able to offset the revenue headwinds from lower sub-advised AUM through reduced SG&A expenses.” — Lucas Pontillo, Chief Financial Officer · 2026-08-07 That discipline is the core of the near-term story. The contrast with prior quarters is instructive. In Q4 2025, outflows were performance-driven, not leakage — as Pontillo clarified: “those outflows you saw in the fourth quarter were really sort of overall client losses, right? And they were performance-driven.” — Lucas Pontillo, Chief Financial Officer (CFO) · 2026-02-26 By contrast, the current outflow mix includes direct transfers and rebalancing, which are harder to recover. Yet last November, Maxime Ménard had highlighted that ex-sub-advised flows were actually positive: “and I would just add to that, despite the difficulties in the quarter, when you exclude the sub-advised mandates, we actually had positive net organic growth in public markets of almost $800 million.” — Maxime Ménard, CEO · 2025-11-13 That underscores the importance of the financial intermediary channel, which has become Fiera's most credible source of organic growth. The path forward hinges on whether the cost cuts and private markets expansion can offset the sub-advisory bleed. With leverage creeping up but management signaling flexibility, Fiera is buying time. The dividend was maintained at CAD 0.108 per share, and buybacks continue, with 700,000 shares repurchased year-to-date. The market, however, will need more than stability — it needs evidence that the non-sub-advised platform can generate sustained inflows. The call offered some of that evidence, but the weight of the remaining outflows looms large.We continue to believe the shares are significantly undervalued at the current levels.