The mutual fund sales tally for July is expected to hit $1.65-billion, the best performance for that month in four years and the third consecutive posting of strong gains for the rebounding sector.
The Investment Funds Institute of Canada said yesterday that the industry racked up between $1.4-billion and $1.9-billion in net sales last month, a stunning 200 per cent more than the $544-million reported in July, 2004. In the first seven months of 2005, the sector has sold about $14.5-billion in funds, close to the $14.7-billion in funds sold in all of last year.
"Canadian funds are picking up a lot of assets," said BMO Nesbitt Burns Inc. analyst Peter Loach. IFIC's July estimate is greater than Mr. Loach's sales forecast of between $900-million and $1.1-billion.
"A lot of this is market driven," Mr. Loach said, noting that the S&P/TSX composite index, fuelled in part by the red-hot energy sector, is up close to 15 per cent in value this year. "What does that do? It instills confidence. It's all about confidence."
Five fund giants accounted for more than 75 per cent of the month's gains. The fund arm of Royal Bank of Canada was No. 1, reporting $493-million in net sales. Rounding out the group was the fund arm of Toronto-Dominion Bank, $250-million; CI Fund Management Inc., $244-million; the fund operations of Bank of Montreal, $205-million; and lastly, IGM Financial Inc., parent of Investors Group and Mackenzie Financial, $119-million.
Even long-suffering laggards had something to smile about.
Net redemptions slowed last month. For example, AIC Ltd. lost about $211-million in retail investment dollars in July, making it the month's worst performer. But the loss is down significantly from the $380-million in redemptions reported a month earlier. Improved fund performance and enthusiasm for equity funds managed by James Cole are helping trim redemptions, the Burlington, Ont., company said.
July's impressive sales -- the best since 2001 -- follow strong data from June and May, when the sector sold $1.8-billion and $1.1-billion in funds, respectively. The summer months are typically a slower sales period with financial advisers hitting the golf links and investors on vacation.
This summer's results mark a rapid shift in fortunes. Fund sales stalled in 2004 when about $600-million in retail investment dollars headed out the door in September and October.
Meanwhile, a fund trading scandal was the talk of IFIC's annual fall convention, a black eye that would see the industry agree to distribute more than $200-million to unitholders.
A mix of factors helped the fund business rebound. First, Canada's equity market is on a roll and investors, via funds, want a piece of the action. Since bottoming out in October, 2002, the S&P/TSX index has climbed an impressive 60 per cent in value.
"People are looking at the markets and saying 'How do I participate?' " said Joe Canavan, president and chief executive officer of Toronto's Assante Corp.
Meanwhile, baby boomers edging toward retirement are anxious for returns and have flocked to income-generating funds, said William Ashby, president of investment firm Beutel Goodman & Co. Ltd.
"With interest rates as low as they are, there's just no yield available of any significance," Mr. Ashby said. "You are seeing investors going back to solid balanced portfolios, high-quality equity portfolios."
© 2007 The Globe and Mail. All rights reserved.
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