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'Phenomenal' February fund sales of $7.8-billion are best since 1998

Sales results come at end of volatile week


Investors pumped an estimated $7.8-billion into Canadian mutual funds last month as they poured money into registered retirement savings plans.

It was the best February showing since 1998 when the industry reported $7.5-billion in net sales.

"It's absolutely phenomenal," said Peter Loach, fund analyst at BMO Nesbitt Burns Inc. in Toronto. The sales data reflects "strong returns from the core asset classes. There were no obvious weaknesses at any fund company."

The Investment Funds Institute of Canada forecast February net sales of between $7.5-billion and $8.1-billion yesterday. In comparison, IFIC reported net sales of $4.9-billion in February last year.

Forecasters expect net sales may reach the $18-billion mark by the end of March, the highest RRSP sales tally since 1998, when investors snapped up $19-billion in funds. In comparison, the industry reported $9.8-billion in net sales during the 2006 RRSP season.

The sales results were issued at the end of a volatile week on the markets, marked by a dramatic decline on Tuesday on the Shanghai stock market that triggered drops on markets around the world. The Toronto Stock Exchange lost about 3.9 per cent of its value on fears that China's appetite for commodities is softening, as well as on a weak economic outlook for the U.S.

The market correction was "a non-event," said Ed Legzdins, president and chief executive officer of BMO Investments Inc. The Toronto fund arm of the Bank of Montreal reported net sales of $659-million last month.

Investors opted to ignore "the short-term ebbs and flows, [of the market] to think of the long term," he said. "People bought into that."

The Big Five banks once again dominated sales. RBC Asset Management Inc., the fund arm of Royal Bank of Canada, was the month's No. 1 fund firm, reporting net sales of $1.5-billion. The Toronto-Dominion Bank's TD Asset Management Inc. was in second place with $1.2-billion in net sales. BMO, when results of unit Guardian Group of Funds are included, was in third place, reporting $763-million in net sales.

Advisers "understand long-term strategies and they are prescribing those long-term strategies to their clients very thoughtfully. A day or a couple of days of jittery markets isn't knocking them off their course," Mr. Ambrosie said.

February was AGF's best sales month in its 50-year history with $539.6-million in net sales. A year ago, the Toronto firm was struggling to win back customers after many months of redemptions, reporting net sales of $29-million.

It was a strong month for firms on the rebound. AIM Funds Management Inc. reported a heady $436-million in net sales, its second consecutive month of gains. Limited exposure to the commodities boom hurt performance and the Toronto company has been in net redemptions since the summer of 2005.

AIC Ltd. reported the month's steepest losses, posting net redemptions of $75-million. The Burlington, Ont., fund company had hoped to end years of redemptions this RRSP season. Assets under management have fallen to $8.5-billion, down from a 2002 peak of about $15.4-billion.

© 2007 The Globe and Mail. All rights reserved.

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