Sales of mutual funds in the linchpin RRSP-selling season tumbled from last year's levels as a weak economy, war and volatile markets kept investors on the sidelines.
Net fund inflows fell to between $6.3-billion and $6.7-billion in the first two months of this year, compared with $7.1-billion in the same period in 2001, according to preliminary figures released yesterday by the Investment Funds Institute of Canada (IFIC), the industry trade group.
"When the markets are really choppy, people aren't that interested in getting invested right away," said Peter Loach, fund analyst at BMO Nesbitt Burns Inc.
"It is not clear whether the market has turned or troughed."
The registered retirement savings plan season figures are also down from 2000, when the industry attracted $7.8-billion -- just before the technology stock bubble burst.
IFIC reported that February net sales of mutual funds came in between $3.8-billion and $4.2-billion, compared with $4.9-billion a year ago.
Mr. Loach said he believes, however, that a lot of the RRSP contributions went into cash accounts and could be deployed this month into funds. "I think there is a strong possibility that March could be stronger than February," he added.
The figures for RRSP season do not include sales for March 1 -- the official deadline for retirement money. Typically, the last day is a huge one for net sales at the bank-owned fund companies.
In February, RBC Funds Inc. (which includes the Royal and the RBC Advisor funds) took in $398-million in net sales. But RBC Funds also took in a whopping $126-million in new money on March 1.
George Lewis, chief executive officer of RBC Funds, said the February net fund flows all went into non-money-market funds, in contrast with previous months.
Mr. Lewis said that trend has surfaced because interest rates are low and bank financial advisers have been recommending clients increase their equity exposure because of an expected economic rebound in the second half of this year.
That trend toward non-money-market funds was also prevalent in the February flows at other bank-owned fund companies. CIBC Securities Inc. took in $370-million in net sales; TD Asset Management Inc., $341-million; BMO Mutual Funds Inc. $209-million; and Scotia Securities Inc. $190.9-million.
Among all fund companies, AIM Funds Management Inc. was the leader in net sales in February, attracting $507-million in new cash. It also bucked the industry trend, with fund sales increasing a whopping 166 per cent to $737-million for the first two months of this year from $277-million last year.
AIM, whose parent bought Trimark Financial Corp. in 2000, said most of the sales in February stemmed from value-oriented Trimark funds compared with the out-of-favour momentum-style AIM funds. "If we didn't have both sides of the shop . . . our sales picture would look a little different," said Dwayne Dreger, AIM's vice-president of communication.
In February, AGF Management Ltd. took in $338-million; Fidelity Investments Canada Ltd., $285-million; Investors Group Inc., $273-million; ClaringtonFunds Inc., $165-million; AIC Ltd., $151-million; Mackenzie Financial Corp., $131-million; C.I. Fund Management Inc., $70-million; Talvest Fund Management Inc., $53-million; Franklin Templeton Investment Corp., $31-million; Elliott & Page Ltd., $28-million; Dynamic Mutual Funds Inc., $27-million; Synergy Asset Management Inc., $22-million; and Mavrix Fund Management Inc., $5-million.
But StrategicNova Mutual Funds Inc. suffered from net outflows of $33-million in February, and Altamira Investment Services Inc. posted net redemptions of $22-million.
© 2007 The Globe and Mail. All rights reserved.
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