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Funds unscathed by stock selloff

MUTUAL FUNDS REPORTER

"Meltdown? What meltdown?"

That was the reaction of Olivia Woo, vice-president and investment counsellor at T.E. Investment Counsel Inc. in Calgary, to Tuesday's stock market rout. She, along with a long list of advisers and fund companies, say investors by and large shrugged off volatile markets this week, a key sales period that marks the close of the registered retirement savings plan sales season.

Tuesday's global equities selloff began in China, which posted its biggest decline in a decade, and spread through Asia, Europe and the Americas. Canada's benchmark stock market index suffered its biggest one-day drop in almost three years, falling 2.7 per cent Tuesday.

As the market tumbled, the phone remained silent at Malcolm Beames' desk. "I didn't get any calls at all, not one," said Mr. Beames, a financial adviser at Canaccord Capital Inc. in Vancouver.

For many investors, it was a non-event. There were no flood of "sell" orders at AGF Management Ltd., Guardian Group of Funds, CI Financial Income Fund, Investment Planning Counsel Inc. and other firms contacted.

The market tumble served as a timely reminder for many investors to ride out volatility and stick with their long-term investment goals, Ms. Woo said. "The healthy correction . . . should not have been an issue as a fixed-income rally offset some of the decline in equities," she said. "I know it's an investing cliché: Stay the course and not get swayed by day-to-day economic noise. But it's so true."

In fact, fund sales this RRSP season remain strong and, for most firms, are well ahead of last year at this time. Forecasters expect that by the end of March, net sales might reach the $18-billion mark, which would be the highest RRSP sales tally since 1998 when investors pumped $19-billion into funds. In comparison, the industry reported $9.8-billion in net sales during the 2006 RRSP season.

"Our sales are quite good," said Joe Canavan, chairman and chief executive officer of Toronto-based Assante Wealth Management Ltd., in an interview from Halifax. The Canadian stock market's fundamentals remain intact, he said, rattling off a long list of economic factors, including high employment, a federal budget surplus, falling debt and stable interest and inflation rates.

Unlike the fever pitch of the technology bubble in which "people were buying companies that no one had ever heard of," Mr. Canavan said, today's market is "solid. There is no real hype here . . . I see exuberance, I see enthusiasm, I see hopefulness. I don't see outright ridiculousness."

© 2007 The Globe and Mail. All rights reserved.

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