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Mutual Fund News

Investors dive back into the mutual fund pool


Canadian investors, buoyed by last month's rebounding global stock markets, jumped back into mutual funds.

Investors plowed about $869-million into funds in September - compared with $922-million a year earlier, according to preliminary figures released yesterday by the Investment Funds Institute of Canada (IFIC).

The September figure includes about $300-million flowing back into money market funds compared with net redemptions of $916-million in August when some investors became nervous about their investments holding troubled asset-backed commercial paper (ABCP)

"It looks like investor confidence has recovered faster than anticipated," said Peter Loach, managing director of fund research at BMO Nesbitt Burns Inc.

Mr. Loach was surprised at how quickly the fund industry recovered after suffering from net redemptions of $1.5-billion in August - the first negative sales month since October, 2004.

While the fund arm of Toronto-Dominion Bank attracted $270-million in money market funds in September, National Bank of Canada suffered $104-million in net redemptions.

Many investors plunked cash back into money market offerings after discovering their funds had no exposure to the non-bank sponsored ABCP, Mr. Loach said in an interview.

And National Bank of Canada and other companies, which held third-party ABCP, have said they would buy back this troubled investment so their unitholders would not be affected.

Dennis Yanchus, statistics analyst at IFIC, said that August and September tend to be volatile months for fund sales. Until a few more months have passed, "it's hard to make much sense of it other than to say we saw a rebound [in September]," he said.

The leaders in fund sales last month included the fund arm of Royal Bank of Canada with $330-million, while the fund arm of Toronto-Dominion Bank attracted $317-million. CI Financial Income Fund, which is not a member of IFIC, posted net sales of $120-million. Fidelity Investments Canada Ltd. took in $106-million.

© 2007 The Globe and Mail. All rights reserved.

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