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Mutual Fund News

Mutual funds record second month of gains

The mutual fund industry recorded net new sales for the second straight month in August, as Canadians put $200-million more into funds than they took out, according to preliminary results from the Investment Funds Institute of Canada.

The nascent winning streak has raised hopes among fund watchers that investors have regained their mettle amid rising stock markets.

The final figure for net sales in August could range from nil to $400-million, IFIC said yesterday when it released the estimates. The industry group will publish its final sales numbers mid-month.

The last time the industry rang up net positive sales for two consecutive months was in February and March of 2002, at the height of that year's selling season for registered retirement savings plans. The following month the industry began a lengthy slump that saw the industry post positive net sales in only one month out of 15 -- February, 2003.

IFIC president and chief executive officer Tom Hockin said assets in the industry increased for the fifth straight month in August. IFIC estimated that net assets of the industry at the end of August were in the range of $410-billion to $415-billion, up about 2.5 per cent from the previous month's total of $403.2-billion.

"Most of the growth within the past five months can be attributed to the strength in the financial markets over that period," he said.

If the sales estimate holds, August's tally would fall short of the $321-million in net sales posted in July. But both months look good compared with June, when investors pulled $577-million out of funds. August's sales also compare favourably with the same month last year, when funds saw $100-million in net redemptions.

Peter Loach, analyst with BMO Nesbitt Burns Inc. in Toronto, said portfolio rebalancing by big institutions may be the reason sales sagged in August from July.

But Mr. Loach is encouraged to see that investors appear to be investing in long-term stock funds and not just parking their cash in money-market funds. "The trend is positive," he said. "It's a sign of improving investor confidence."

In Canada last month, CIBC Asset Management led the way with $195-million (Canadian) in net sales. TD Asset Management posted net sales of $67-million, BMO Funds $49-million, RBC Asset Management Inc. $48-million and National Bank Mutual Funds $32-million.

Scotia Securities Inc. reported net redemptions of $34-million. Also losing ground were Fidelity Investments, with $114-million in net redemptions, AGF Management Ltd. with $99-million and AIM Trimark Investments, with $62-million.

© 2007 The Globe and Mail. All rights reserved.

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