AGF Money Manager Report August 2011

In a recent conference call featuring four AGF money managers to discuss the issues of U.S. and European government debt levels, Rory Flynn of AGF International Advisors (AGFIA is the manager of AGF Global Value, AGF International Stock, AGF European Equity) had the following comments:

1. European equities in general are trading at the extreme low end of their historical price levels.

2. Germany and some other countries have government bond yields below their rate of inflation, meaning that bond investors are so fearful they are willing to accept negative real returns.  Such bonds are at the extreme high end of their historical price level.

3. Many people are focusing not on actual risk, but where they perceive risk to be.  In some cases the numbers very clearly contradict the stated worries.  Spain is actually not in a high risk position but has been lumped in with others that are in greater difficulty.

4. AGFIA has already considered how the financial companies in the funds could handle losing money on government bonds, and are comfortable that the actual losses would only be a small fraction of the company assets, yet the market price of the company shares has been bid down far more than this.

5. From its portfolio of companies, the AGF Global Value Fund is currently (as of June 30, 2011) earning dividends of 4.0%, has a price/earnings ratio of 9.7 and the earnings have grown at 13%.  AGF International Stock and AGF European Equity have similar numbers.  The businesses have been doing very well but have not yet been rewarded with the significant rise in share prices that such numbers justify.

Rory Flynn

Rory Flynn joined AGF International Advisors Company Limited (AGFIA) in 1992. As a principal member, Rory has helped build the team and develop their renowned investment expertise. Currently, he holds the title of Global Advisor, where he oversees the day-to-day management of all mandates advised by the team.

Rory has spent his entire investment career with AGFIA. Before joining the firm, he was an accounting and finance lecturer at the University of Limerick.

Rory received his Master of Business Studies from University College Dublin and has a Bachelor of Commerce from University College Cork. He is a member of the CFA Institute, the Society of Investment Analysts in Ireland and the UK Society of Investment Professionals.

The full AGFIA management team is shown on the AGF web site.