Skip navigation

Mutual Fund News

Mutual investors shun equities for more conservative products

Bulk of new investment in June flows to income, bond and balanced vehicles

MUTUAL FUNDS REPORTER

Investors continued to shun equity funds last month, opting to put the bulk of $491-million in new investment into conservative income, bond and balanced funds, the mutual fund industry reported yesterday.

The Investment Funds Institute of Canada reported net sales of $491-million last month, a slight dip from $533-million in May. But the June data are a dramatic improvement over the same period a year ago, when the sector reported net redemptions of $577-million.

"Assets in the industry rose for the third straight month," Tom Hockin, IFIC president, said in a statement. The industry's total assets under management reached $476.1-billion on June 30, up 22 per cent from $390.8-billion a year earlier. The results fell within the range of IFIC's preliminary June sales estimate of between $150-million and $550-million.

Dividend and income funds reported the biggest gains, drawing $404.6-million in net new sales. Bond and income funds were close behind, reporting $393.5-million in net new sales.

Balanced and portfolio funds were the best sellers at AIM Funds Management Inc., TD Asset Management Inc. and RBC Asset Management Inc. AIM Funds' Trimark Income Growth Fund, a Canadian balanced fund, was the month's best performer, reporting $121-million in net new sales.

"Investors are still looking for these types of conservative funds," said Sal Tino, chief financial officer of ClaringtonFunds Inc. More than half of the Toronto company's $28-million in June net sales were in balanced, dividend and income funds, he said.

Canadian common share funds, meanwhile, reported June net redemptions of $296.5-million and investors cashed in $123-million in foreign common share funds.

AGF Funds Inc. was the month's worst performer, reporting $167.6-million in net redemptions. The Toronto firm's International Value Fund was its biggest decliner, with net redemptions of $56-million.

"People are repatriating their Canadian dollars and putting them into structured products," said Peter Loach, analyst at BMO Nesbitt Burns. Franklin Templeton Investments Corp. was perhaps the best example of the trend. The $6.8-billion Templeton Growth global equity fund reported $41.5-million in net redemptions in June.

Nevertheless, the Toronto fund manager was one of the month's best performers, reporting $96.5-million in net new sales. The bulk of new dollars was sunk into FT's Quotential program, a goal-oriented portfolio of funds, said James Cook, executive vice-president of strategic initiatives.

"It's the right product for the time as advisers try to manage the risk within their client's portfolio with an all-encompassing product," he said.

Rudy Luukko, investment funds editor at Morningstar.ca, said wary investors have missed out on the equity market's better returns. In the first six months of 2004, global and U.S. equity funds reported a median return of 5.7 per cent while Canadian bond funds posted a median return of a slender 0.5 per cent.

"There is still a reluctance to participate in the mainstream equity markets," Mr. Luukko said.Sales increase

Year-to-date net new sales to June 30, excluding reinvested distributions, $'000

Balanced.........................$3,223,077.........$58,827..........+ 5,378.9%

Canadian common shares.........131,130......- 1,193,486...........+ 111.0

Foreign common shares..........245,369......- 1,416,017............+ 117.3

Bond and income................4,103,079.........1,926,597............+ 113.0

Foreign bond and income.........323,542...........152,344.............+112.4

Dividend and income............4,054,094.........1,401,208............+ 189.3

Mortgage...........................310,751..........- 11,670...........+ 2,762.8

Real estate........................- 47,528............54,466.............- 187.3

U.S. common shares..............698,351.............93,135............+ 649.8

Money market.....................502,947.......- 3,826,923............+ 113.1

Foreign money market..........- 224,783.........- 184,423.............- 21.9

All funds.....................$13,320,029......- $2,945,942.........+ 552.1%

SOURCE: INVESTMENT FUNDS INSTITUTE OF CANADA

© 2007 The Globe and Mail. All rights reserved.

Search Fund News


Advanced Search

GlobeinvestorGOLD.com

Only GlobeinvestorGOLD combines the strength of powerful investing tools with the insight of The Globe and Mail.

Discover a wealth of investment information and and exclusive features.

Free E-Mail Newsletters

  • Morning news headlines
  • Morning business headlines
  • Financial highlights
  • Tech alert
  • Leisure

Sign-up for our free newsletters



Back to top