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Mutual Fund News

Sales rebound sharply from January correction

FUNDS REPORTER

Canadian investors pumped an estimated $6.2-billion into mutual funds in February - the key month in the registered retirement savings plan season - as beleaguered stock markets began to bounce back.

"The global market recovery helped to buoy sales in February," Peter Loach, managing director of fund research at BMO Nesbitt Burns Inc., said yesterday in an interview. "If you are saving for retirement 20 years down the road, it's a good opportunity. If you are investing in a core mutual fund, you are getting your shares cheaper."

The S&P/TSX composite index gained 3.25 per cent last month, recouping some of the lost ground from January, when it tumbled 4.9 per cent.

The Investment Funds Institute of Canada (IFIC) forecasted February mutual fund sales of between $5.9-billion and $6.5-billion, with about half the cash going into non-money market funds. That's in sharp contrast with January, when the industry attracted only $460-million.

"We had that really sharp correction that shocked a lot of people," IFIC statistics analyst Dennis Yanchus said. "We saw people hold off on investing. Until last Friday, markets had come back, and people were moving their money back into long-term funds. They felt more comfortable about investing."

Fund sales last month, however, were still off from the nearly $8-billion in new money that flowed into mutual funds in February of 2006. That was the best year since 1998, when the industry posted $7.5-billion in net inflows.

Investors, meanwhile, yanked $442-million from AIM Funds Management Inc., which sells funds under the AIM and Trimark brands. It was the seventh consecutive month for net redemptions - on top of $743.5-million in January - for AIM.

The outflows of money have stemmed partly from concerns about the departure of key fund managers running Trimark funds, and also its chief investment officer Patrick Farmer since last August.

AIM has lost three managers, the latest being Richard Jenkins, who last Friday resigned from the helm of the $5.9-billion flagship Trimark Select Growth Fund. He will be joining former colleague Bill Kanko at Creek Investment Management Inc., which runs mutual funds for Hartford Investments Canada Corp.

Mr. Loach said that companies with funds focused on a value-investing style - currently out of favour in the hot resource market - have experienced more weakness than companies with growth-oriented funds.

RBC Asset Management, the fund arm of Royal Bank of Canada, was the leader last month, with $2.2-billion in net sales. The bank last month struck a deal to buy Phillips Hager & North Investment Management Ltd., which saw $64-million in outflows.

Among non-bank firms, Fidelity Investments Canada Ltd. had $545-million in net sales, and CI Investments, a unit of CI Financial Income Fund, had $513-million.

CI's new Cambridge funds run by former Fidelity star manager Alan Radlo brought in $50-million.

Mutual fund sales for 2008 RRSP season

Firms ranked by total assetsFEBRUARYJANUARY
FUND COMPANY($MILLION)($MILLION)
IGM Financial (Investors Group, Mackenzie)$405.0 - $346.0
RBC Asset Management$2,235.0 $1,700.0
CI Investments$513.0 - $490.0
TD Asset Management $845.0 $394.2
CIBC Asset Management$655.0 $100.6
AIM Trimark Investment- $442.0- $743.5
Fidelity Investments Canada$545.0 - $282.3
BMO Financial Group (BMO, Guardian) $268.0 - $115.4
AGF Funds$35.4 - $263.3
Franklin Templeton$92.0 - $261.2
Dynamic Mutual Funds$223.0 $263.6
Phillips Hager & North*- $64.0$71.40
Scotia Securities$294.0 $58.4
Federation des caisses Desjardins
(Desjardins, Northwest)$77.0 $530.3
MD Management n/a- $4.4
National Bank Group (National Bank, Altamira)$68.0 - $2.1
Manulife Investments$111.0 $24.7
IA Clarington Investments$68.0 - $12.2
AIC Ltd.- $135.0- $151.6
Brandes Investment Partners- $36.0- $60.4

*Phillips Hager & North is being acquired by RBC; estimate

SOURCE: INVESTMENT FUNDS INSTITUTE OF CANADA

© 2007 The Globe and Mail. All rights reserved.

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