Canadian mutual fund sales appear to have melted down along with world stock markets last month.
Preliminary figures from the Investment Funds Institute of Canada suggest that when the final numbers are in, they will show that net sales in May fell dramatically, to about $350-million, down from $1.1-billion a year ago.
"May has traditionally been a slow month and this year we're coming off a really strong RRSP season," said Joanne De Laurentiis, president and chief executive officer of the industry trade group.
Net assets for the industry at the end of May are expected to be in the range of $588-billion to $593-billion, down 2.8 per cent from April's tally of $608-billion, largely reflecting the stock market plunge, said IFIC statistics manager Erwin Go.
RBC Asset Management Inc., fund unit of the Royal Bank of Canada, was once again the industry's net sales leader, reporting $267-million in new business. CI Financial Inc. of Toronto was in second place, reporting net sales of $238-million. Rounding out the top three was Dynamic Mutual Funds, the fund unit of the Dundee Wealth Management Inc. empire, reporting $110-million in net sales.
Eight fund companies reported net redemptions last month. CIBC Asset Management, the fund arm of Canadian Imperial Bank of Commerce, lost $296-million in fund business, while AIM Funds Management Inc. lost $281-million in Trimark and AIM-branded business. Privately held AIC Ltd. of Burlington, Ont., reported $171-million in redemptions.
Also yesterday, mutual fund researcher Morningstar Canada provided more evidence of May's market carnage. Only five of the 31 fund indexes the firm tracks managed to break even during May's carnage in the markets -- and barely so at that -- while all the rest suffered losses.
Top among the handful that managed to eke out gains, the firm said, was Canada real estate fund index, which gained 0.4 per cent during the month.
Next was the Canadian short-term bond and mortgage fund index, up 0.2 per cent, followed by the Canadian and U.S. money market fund indexes, tied at 0.1 per cent, and, at fifth spot, Canadian bonds, whose index rose 0.05 per cent. "Stock markets around the world, overheated after months of strong performance, suffered a correction during May," Morningstar Canada analyst Brian O'Neill said in a statement. The firm's global equity fund index fell nearly 5 per cent during the month.
Battered hardest by the downdraft was the emerging markets fund index, which plunged 12.3 per cent for the month. "These funds were overdue for a pullback, having enjoyed stellar gains earlier in the year," Mr. O'Neill said.
Precious metals were the second-worst performer, with their funds index getting hammered down by 9.7 per cent, despite gold's dramatic runup to more than $700 (U.S.) an ounce before falling back to $600 by the end of May.
Nevertheless, on a year-to-date basis, precious metals remained the best-performing fund index, up more than 28 per cent.
© 2007 The Globe and Mail. All rights reserved.
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