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Canadian mutual fund sales plummet in April


Canadian mutual fund sales plummeted in April as investors fled volatile stock markets and low-yielding money markets to chase better returns elsewhere.

According to preliminary estimates released yesterday by the Investment Funds Institute of Canada, net sales of funds were flat, at best, in April, compared with inflows of $4-billion a year earlier. At worst, the industry suffered $400-million in net redemptions in the month, IFIC estimates.

In March, when money is still flowing into registered retirement savings plans, fund firms took in $2.3-billion. Sales have been falling year-over-year since February.

"With negative markets, you can't expect strong sales," said Peter Loach, mutual fund analyst at BMO Nesbitt Burns Inc. "There is a certain level of correlation there."

The S&P/TSX composite index fell 2.3 per cent in April for a one-year loss of 2 per cent. The Nasdaq composite index was down 8.5 per cent last month for a one-year drop of 20.2 per cent.

The big bank-owned fund companies suffered from net outflows last month with most of the cash leaving money market funds.

TD Asset Management Ltd. posted net redemptions of $385-million; RBC Funds Inc., $219-million; Scotia Securities Inc., $150-million; CIBC Securities Inc., $149-million and BMO Mutual Funds Inc., $63-million.

Patricia Lovett-Reid, a vice-president at TD Asset Management, attributed the wave of outflows to investors heading to alternative investments.

Those alternatives include three-month treasury bills paying 2.38 per cent, compared with lower returns from money market funds. "We are definitely seeing a mentality chasing yields here," she said.

Among all companies, AIM Funds Management Inc. was the leader with $342-million in net sales in April. AIM spokesman Dwayne Dreger said the Trimark Fund -- a global equity fund -- was the top seller in April and represented one-third of net sales.

Other fund companies with positive inflows include ClaringtonFunds Inc. with $131-million in net sales; Fidelity Investments Canada Ltd., $73-million; AIC Ltd., $40.5-million; Counsel Group of Funds, $35-million; Talvest Fund Management Inc., $32-million; Dynamic Mutual Funds Ltd., $27-million; Elliott & Page Ltd., $9-million; C.I. Fund Management Inc., $4-million and Mavrix Fund Management Inc., $3.8-million

But AGF Management Ltd. saw net redemptions of $160-million last month.

AGF chief executive officer Blake Goldring attributed the redemptions mainly to outflows from funds run by Brandes Investment Partners LLP.

Brandes recently announced it plans to leave AGF to start its own fund company and AGF has actively been looking for a replacement.

© 2007 The Globe and Mail. All rights reserved.

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