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Investors put brakes on mutual fund sales

Net March redemptions likely negative


Nervous Canadian investors likely pushed mutual fund sales back into negative territory in March after timidly putting an end to a 10-month losing streak with net sales in February.

Net redemptions for March are likely to total about $200-million, according to preliminary estimates released yesterday by the Investment Funds Institute of Canada. IFIC president and chief executive officer Tom Hockin said the final figure for net redemptions could range from nil to $400-million when official numbers are released later this month.

Peter Loach, an analyst at BMO Nesbitt Burns Inc., said investors appear to be holding back their cash until some of the volatility in stock markets settles.

March was marked by huge swings in equity markets leading up to the war in Iraq as investors alternately sold stocks on fears that conflict was imminent and bought them back in hopes that war could be avoided.

"These wild vacillations are just scaring people," said Mr. Loach.

Mr. Loach said the fund industry has not recorded net redemptions in March since analysts first began compiling statistics more than 10 years ago.

The Toronto Stock Exchange S&P/TSX composite index slipped 3 per cent in March, while in the United States, the benchmark Standard & Poor's 500-stock index edged up less than 1 per cent.

James Gauthier, analyst at Dundee Securities Corp., said the market's performance has done little to restore investor confidence.

"There is nothing that would motivate investors to invest now."

March's performance marks the end of a weak registered retirement savings plan season for mutual fund companies. The deadline for contributions was March 3.

February's sales of $485.2-million were stronger than preliminary forecasts but still fell far short of the sales tally for the same month in previous years.

IFIC also estimated that net assets of the industry at the end of March were in the range of $368-billion to $373-billion, down about 1.2 per cent from February's total of $375.2-billion.

Among companies reporting results for March to IFIC, C.I. Mutual Funds had net redemptions of $180-million, RBC Funds Inc. had net redemptions of $117-million and Fidelity Investments, $117-million. AGF Management Ltd. reported net redemptions of $99-million, BMO Funds $91-million and Investors Group Inc., $49-million.

In positive territory, AIM Trimark Investments had net sales of $109-million, Scotia Securities Inc. posted net sales of $100-million and TD Asset Management, $95-million.

© 2007 The Globe and Mail. All rights reserved.

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