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Mutual Fund News

Fund sales rocket to best August since 1997

Three of Big Five banks have stellar month

MUTUAL FUNDS REPORTER

The tally for mutual fund net sales last month is expected to come in at $1.75-billion, the recovering sector's best August on record since the bull market of 1997.

The Investment Funds Institute of Canada said yesterday August net sales will come in at between $1.5-billion and $2-billion. That's up from an anemic $19-million in funds sold in August last year.

In the first eight months of this year, the sector has sold about $16.5-billion in funds, trouncing the $14.7-billion in funds sold in all of last year.

"It's explosive year-over-year improvement," said Peter Loach of BMO Nesbitt Burns Inc. He estimates August sales will range between $1.4-billion and $1.6-billion.

But the month's strong performance was thinly spread. The fund arms of only three of the Big Five banks had a great August run. The Royal Bank of Canada was the No. 1 fund company over all, reporting $421-million in net sales, followed by the Bank of Montreal with $297-million, and lastly, Toronto-Dominion Bank at $258-million.

The Bank of Nova Scotia's fund operations, meanwhile, reported $18-million in net redemptions while the Canadian Imperial Bank of Commerce reported a slender $9-million in net sales.

AIC Ltd. was once again one of the month's worst performers, reporting $199-million in net redemptions. Joining AIC in negative territory were AIM Funds Management Inc., Fidelity Investments Canada Ltd. and Altamira Investment Services Ltd.

Yield and income-generating funds continue to dominate sales, analysts said. A slew of new products are on tap to meet demand, including Guardian Group of Funds Ltd.'s GGOF Floating Rate Income Fund, designed to profit from rising interest rates, and TD Bank's income-generating TD Income Trust Capital Yield Fund.

"It's the continued conservative nature that investors have taken since the market falloff of a couple of years ago. People want to know that they are getting something off their investment right away rather than waiting for a capital gain," said Eric Frape, vice-president of product management at Clarington Funds Inc. of Toronto.

Clarington reported net sales of $22-million last month. Among its top sellers was the Clarington U.S. Dividend Fund, a $44-million (U.S.) blue-chip fund that distributes income on a monthly basis.

© 2007 The Globe and Mail. All rights reserved.

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