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Mutual Fund News

Fund sales swing up in February

Results end 10-month streak of outflows

INVESTMENT REPORTER -- The Investment Funds Institute of Canada said yesterday that net sales during February totalled $485.2-million, ending an unprecedented 10-month streak of net outflows.

The final result for the month was significantly higher than the earlier net sales estimates made by IFIC of between $100-million and $400-million, or almost twice the $250-million average. The figures exclude reinvested dividends.

The net sales in February represented a swing of almost $1-billion from January, 2003, when the net redemptions totalled $469-million.

However, the net sales for the month during the peak selling season for registered retirement savings were down dramatically from the $4.18-billion of net new sales in February, 2002, and the $6.5-billion peak two years before that.

It's a sign of the apathy of investors, said James Gauthier, an analyst with Dundee Securities Corp. "I think people are standing on the sidelines saying, 'I can't take this any more,' " he said, referring to the poor performance of the stock markets.

"The preference of Canadian investors was made abundantly clear," said George Vasic, an analyst with UBS Warburg Inc. They continue to look for safety, investing in bonds, dividend funds and balanced mutual funds, while avoiding Canadian as well as foreign funds, Mr. Vasic said.

The net redemptions in February for Canadian common share funds totalled $120-million, while redemptions of foreign common share funds totalled $257.4-million. The total outflow from Canadian funds during January and February was $389-million, "the worst on record," Mr. Vasic said. IFIC began tracking industry-wide sales in 1990. There was strong interest in bond funds with net sales in February, excluding reinvested income, of $477.4-million; $265-million in dividend and income funds; and $134-million in balanced funds.

The net sales of long-term funds totalled $633-million, the highest level in nine months, according to IFIC. The outflow from domestic and foreign money market funds totalled $147.9-million.

"Despite highly volatile markets, it is pleasing to see that investors have put money into long-term mutual funds as they see it as an investment vehicle to meet their long-term goals," said Tom Hockin, IFIC's president and chief executive officer.

Total assets under management by IFIC members fell 1.7 per cent or $6.4-billion during the month to end February at $375.2-billion, which includes $60.6-billion in money market funds. As a result mainly of declining stock markets, the total assets under management are down 13.1 per cent from $431.7-billion a year earlier, the first decline in February since 1995.

The four largest monthly declines in assets on a percentage basis among the top 20 mutual fund groups were 5.8 per cent or $895.3-million to $14.6-billion by Franklin Templeton Investments; 4.2 per cent or $920.4-million to $21-billion by AGF Management Ltd.; 3.4 per cent or $402.9-million to $11.4-billion by AIC Ltd.; and 3 per cent or $114.5-million to $3.7-billion by Altamira Investment Services Inc.

The 10 largest fund groups by assets are Investors Group at $36.1-billion; RBC Funds Inc. $33.5-billion; CIBC Asset Management $32.6-billion; AIM Funds Management Inc. $32-billion; Mackenzie Financial Corp. $28.9-billion; TD Asset Management Inc. $28.5-billion; CI Mutual Funds Inc. $26.6-billion; Fidelity Investments Canada Ltd. $26.4-billion; AGF Management Ltd. $21-billion; and Franklin Templeton Investments $14.6-billion.

Mutual fund sales
Year-to-date net new sales to Feb. 28, excluding reinvested distributions, $'000

Fund type                   2003        2002      % change

Balanced                  $158,523   $1,032,157    -84.6%

Canadian common shares    -388,963      747,769   -152.0

Foreign common shares     -499,779    1,227,038   -140.7

Bond and income            677,835      718,564     -5.7

Foreign bond and income     29,185      253,182    -88.5

Dividend and income        451,911      667,950    -32.3

Mortgage                    -4,369       53,123   -108.2

Real estate                 28,495       16,078    +77.2

U.S. common shares          66,254      988,625    -93.4

Money market              -497,832      945,037   -152.7

Foreign money market        -3,641       36,667   -109.9

All funds                  $16,619   $6,686,190    -99.8%

© 2007 The Globe and Mail. All rights reserved.

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