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Mutual Fund News

Fund industry back in the black in November

MUTUAL FUNDS REPORTER

The mutual fund industry bounced back into the black last month, reporting a modest $250-million in net sales in November as the registered retirement savings plan season approaches.

In its preliminary sales forecast, the Investment Funds Institute of Canada said yesterday it expects the sector to report net sales of between $50-million and $450-million for last month. The forecast ends two months of net redemptions that saw investors yank a total of $597-million out of funds in September and October.

"There's a little blip in the momentum and it's recovering," said Peter Loach, an analyst at BMO Nesbitt Burns Inc.

If the outlook is correct, November sales will nevertheless fall behind results of a year ago when mutual funds reported $513-million in net new sales.

Brandes Investment Partners and TD Asset Management Inc. share top honours, each reporting $164-million in net sales. Manulife Investments was close behind, reporting $153-million in sales.

Eight firms reported net redemptions. AIC Ltd. had the worst performance, reporting $280-million in losses, while Fidelity Investments had $232-million in redemptions. AGF Management Ltd. did not report its figures but is expected to be in negative territory.

The biggest surprise, however, was the mixed results from the mutual fund arms of the Big Six banks. While TD, BMO Funds and RBC Asset Management Inc. each reported strong net sales, Scotia Securities Inc., National Bank of Canada and especially CIBC Asset Management, with $188-million in net redemptions, were all in the red.

Detailed sales data will be released in mid-December but analysts expect the results will mirror the balance of 2004 with investors redeeming money market funds, snapping up income-generating products and cautiously testing the equity markets.

In an analysis released yesterday, Morningstar Canada reported investors were hard pressed to lose money in any mutual fund last month. All 32 fund indexes followed by the fund-rating firm posted gains. Strong oil and gold prices pushed the Natural Resources Fund Index to the top of the pack, reporting a one-month return of 7 per cent.

Asian demand for commodities and the definitive outcome of the U.S. presidential election helped drive momentum on the markets, said Mark Chow of Morningstar.

© 2007 The Globe and Mail. All rights reserved.

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