Canada's mutual fund industry closed out 2003 with a bang as bullish investors pumped an estimated $900-million into funds last month, raising hopes for a badly needed boost in the key RRSP season.
The total sales for December could range from $700-million to $1.1-billion when the final figures are available later this month, according to the Investment Funds Institute of Canada.
If the $900-million tally holds, December would mark the best sales month for the industry since March, 2002, when sales totalled $2.3-billion.
Peter Loach, an analyst with BMO Nesbitt Burns Inc., said the run-up in stock markets in December appears to have bolstered investors' optimism.
"There's certainly a lot of confidence," he said.
Stock markets continued to rally yesterday. In New York, the Dow Jones industrial average jumped 134.22 points to close at 10,544.07, its highest in more than 21 months. In Canada, the S&P/TSX composite index gained 87.96 points to close at 8,381.66, its highest close since May, 2001.
The Dow is up almost 10 per cent in the past six weeks, capping a year in which it advanced 25 per cent, while the TSX has climbed 8 per cent since mid-November and gained 24 per cent in 2003.
Mr. Loach said December was relatively strong compared with other years because markets did not see as much of the tax-loss selling that typically takes place at the end of the year. He said stock investors likely did not want to sell into a rising market.
"Precious metals are just on a tear, resources too," he said.
Mr. Loach added that the rebound in the mutual fund industry should bode well for this year's key season for contributions to registered retirement savings plans -- which typically begins in January and runs to the beginning of March.
"It's getting better and better."
December marked the third consecutive month of net sales for Canada's mutual fund industry. For the three months, the industry garnered net sales of nearly $2.1-billion.
IFIC president and chief executive officer Tom Hockin said December's sales will probably be the highest of 2003, beating the high-water mark of $513-million set in November.
In December, 2002, investors yanked $238.2-million from their mutual funds in net redemptions.
Mr. Hockin said assets in the industry swelled about 3.5 per cent, or $15-billion, to between $435-billion and $440-billion in December, compared with $423.6-billion in November.
That was the largest monthly increase in assets for 2003.
Among fund companies, the mutual fund units of Canada's chartered banks posted the strongest sales in December.
RBC Asset Management Inc. reported net sales of $229-million, TD Asset Management had net sales of $175-million and Scotia Securities Inc., $167-million. BMO Funds Inc. had net sales of $165-million.
Franklin Templeton Investments posted net sales of $108-million, Brandes Investment Partners & Co. reported net sales of $91-million and CIBC Asset Management Inc., $85-million.
Among those in the losing camp, AGF Management Ltd. reported net redemptions of $129-million, Fidelity Investments had net redemptions of $102-million and AIC Ltd., $101-million.
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