The mutual fund industry tallied $513-million in net sales in November, marking the best month of the year so far, but investors continued to pour cash into bond and income funds while pulling money out of stock funds.
Canadians yanked a net $178-million from domestic equity funds last month, with another $99.1-million flowing out of foreign equity funds, according to the Investment Funds Institute of Canada, which reported final numbers for November yesterday.
The total figure, which represents net new sales excluding reinvested dividends, beat February's tally of $485.1-million and was in line with the estimate released by IFIC earlier this month.
November marked the second consecutive month of net sales, and the fourth positive month for the industry in the past five. The final tally shows a turnaround from November of last year, which saw Canadians rushing for the exits with $579.8-million in net redemptions.
Total assets under management edged up 0.8 per cent in November to $423.6-billion from $420.3-billion in October. Assets have grown 6.6 per cent from $397.5-billion at the same time last year.
Dan Hallett, president and chief executive officer of Windsor, Ont.-based Dan Hallett & Associates Inc., said November's numbers show that investors continue to chase the past performance of some hot bond and dividend funds. 'There are specific funds that are grabbing a disproportionate share of the market.' He pointed to the RBC Monthly Income and the CIBC Monthly Income funds - both offered by big banks - as two examples of funds that are attracting investors. Among global funds, Mackenzie Cundill Value and Trimark Fund are also doing well, he added.
The bond and income fund category recorded net sales of $323.8-million in November, the dividend and income group had net sales of $495.3-million, and the foreign bond and income category posted net sales of $18.9-million. Mr. Hallett said Canadians are missing out on the rebound in stock markets by avoiding domestic equity funds. The S&P/TSX composite index has gained 19.9 per cent so far in 2003.
'We've had a recovery for most of this year, but sales haven't reflected that.' Mr. Hallett expects investors will put money back into Canadian stock funds when the traditional season for registered retirement savings plan contributions begins in January, but by then many people will have missed the upswing.
'I'm worried that people will get in too late,' he said.
George Vasic, strategist and chief economist at UBS Securities Canada Inc., noted that November's net redemptions in Canadian stock funds mark the 18th consecutive month of outflows, while U.S. equity funds have seen net purchases each month since March.
Year-to-date sales
Net new sales to Nov. 30, excluding reinvested distributions, $'000
Fund type 2003 2002 % change Balanced $733,711 $1,830,329 -59.9% Canadian commonshares -2,154,486 187,190 -1,251.0 Foreign common shares -2,253,234 387,491 -681.5 Bond and income 3,596,738 1,577,085 +128.1 Foreign bond and income 315,916 94,712 +233.6 Dividend and income 3,514,960 2,305,345 +52.5 Mortgage 1,442 -95,975 +101.5 Real estate 70,081 79,852 -12.2 U.S. common shares 186,403 1,908,485 -90.2 Money market -5,300,871 -4,177,617 -26.9 Foreign money market -442,979 -495,102 10.5 All funds -$1,732,319 $3,601,795 -148.1%
SOURCE: INVESTMENT FUNDS INSTITUTE OF CANADA
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