The mutual fund industry ended 2006 with a bang, reaping in an estimated $3.3-billion in net sales in December, the Investment Funds Institute of Canada reported yesterday.
The preliminary results are nearly double the fund industry's December, 2005, performance when the sector reported net sales of $1.7-billion. Fund sales for 2006 are expected to total about $21-billion, down slightly from 2005's tally of $23.4-billion.
"It was an exceptionally strong month . . . we saw some serious momentum towards the end of the year," said Peter Loach, fund analyst at BMO Nesbitt Burns Inc. in Toronto. He expects sales gains to continue through the coming registered retirement savings plan season, a core bread-and-butter sales period for the industry.
Fund sales are "fired up" heading into the new year, agreed Frank Hracs of industry research firm Canadian Mutual Fund Analyst.
"I would expect to see the 2007 RRSP season to post an increase of at least 50 per cent versus 2006 when net sales totalled about $10-billion," Mr. Hracs said.
RBC Asset Management Inc. was one again the month's top-selling companies, reporting $546-million in net sales. TD Asset Management was close behind, reporting $536-million in business. IGM Financial Inc., Winnipeg parent of Investors Group and Mackenzie Financial Corp., reported $350-million in net sales.
International markets are back in vogue with money managers with a global focus showing momentum last month. AGF Management Ltd., Fidelity Investments Canada Ltd. and Brandes Investment Partners & Co. all reported double-digit sales results.
"Canadians love global funds like a fat kid loves cake," said Raynor Burke, head of fund research at National Bank Financial Inc.
Only four of the 25 money managers reporting to IFIC saw business fall in December. AIC Ltd. reported $47-million in net redemptions followed by $31-million in losses at Altamira Investment Services Inc. and $29-million in redemptions at AIM Funds Management Inc.
The worst may be over for boutique money managers with a heavy weighting in income trusts funds. In November, four small firms reported redemptions; in December, only Mavrix Funds Ltd. was on the wrong side of the ledger, reporting net redemptions of $7-million. On Oct. 31, the federal government announced plans to tax the asset class in 2011.
Early indications are Manulife Financial Corp. will be marketing the hot product of the coming RRSP season. In October, the insurance giant launched Income Plus, a complex offering that guarantees monthly payments independent of where an investor retires in the market cycle. In less than three months, the portfolio of third-party funds has attracted about $1.8-billion in net sales.
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