The mutual fund industry's bullish performance continued last month with the sector raking in an estimated $1.85-billion in new net sales.
But the gains were spread among just a handful of major players, prompting speculation that another round of fund company mergers and acquisitions is inevitable.
"Strong sales and the quest for a large asset base . . . is going to spur consolidation again," said Peter Loach of BMO Nesbitt Burns Inc. The analyst estimates September sales will range between $1.6-billion and $1.8-billion.
The Investment Funds Institute of Canada said yesterday last month's net sales will come in at between $1.6-billion and $2.1-billion. That's up from a dismal $545-million in net redemptions reported in September last year.
"Over $1.8-billion in net new sales, marking the highest September sales figure since 1997, proves the strong confidence Canadian consumers maintain in the . . . mutual fund," said Tom Hockin, IFIC's president and chief executive officer, in a statement.
But the month's strong performance was thinly spread. For example, the fund arms of only three of the Big Five banks reported significant net sales. The Royal Bank of Canada continued its reign as the No. 1 fund company over all, reporting $539-million in net sales, followed by Toronto-Dominion Bank at $378-million and third among the banks was Bank of Montreal with $223-million.
At least five companies lost retail business in September. AIC Ltd. of Burlington, Ont., was the worst performer, reporting net redemptions of $201-million. Rounding out the list of September losers, as expected, was Altamira Investment Services Inc., down $18-million, and Fidelity Investments Canada Ltd., off $40-million. AGF Management Ltd. was expected to report net September redemptions of about $150-million late yesterday.
To the surprise of some, some past strong performers also suffered September redemptions. AIM Funds Management Inc. was off $137-million and the fund arm of the Canadian Imperial Bank of Commerce was down $110-million. Meanwhile, several firms reported marginal net sales, including Investors Group Inc., Mackenzie Financial Corp. and the fund arm of Bank of Nova Scotia.
"While the industry looks healthy, there is one side doing fabulous and one side that's doing poorly," said Bill Holland, chief executive officer of CI Fund Management Inc., which reported $131-million in September net sales.
Raynor Burke, head of fund research at National Bank Financial Inc., said retail investors continue to favour yield-generating mutual funds with a heavy weighting in income trusts and energy equities.
Several fund companies suffering from redemptions, including AIC, AGF and Fidelity, have few yield funds or were slow to embrace the income trust market, he said.
"If your product line-up hasn't changed significantly over the last two to three years, then you have found yourself missing out." Mr. Burke said.
A strong overall performance by the mutual fund industry in September masked the fact that the biggest gains were spread among just a handful of players, prompting speculation another round of mergers and acquisitions is imminent.
|Fund company||September net sales ($million)||Total assets under management ($billion)|
|1||RBC Asset Management||$539||$55.90|
|2||TD Asset Management||378||41.9|
|3||Phillips Hager & North||242||15.4|
C.I. Investments' assets are approximated by IFIC based on C.I. reported assets of $51.69-billion excluding segregated funds valued at $1.01-billion, hedge funds valued at $171-million and Assante Artisan Portfolios valued at $763-million on Aug. 31, 2005
|Fund company||September redemptions||Total assets under management ($billion)|
|1||AIC Ltd.||- $201||$8.90|
|2||AIM Trimark Investments||- 137||44.6|
|3||CIBC Asset Management||- 110||44.7|
|4||Fidelity Investments||- 40||33.7|
|5||Altamira Investment Services||- 18||3.8|
SOURCE: INVESTMENT FUNDS INSTITUTE OF CANADA
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