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Mutual Fund News

Sales soar as investors 'confident' in market


Canadian investors stashed about $2.45-billion into mutual funds in May as the surging domestic stock market jolted many from the sidelines.

While sales were down 30 per cent from $3.5-billion in the same month last year, they were up sharply from $560.8-million in April, according to figures released yesterday by the Investment Funds Institute of Canada (IFIC).

"As soon as investors feel confident about the markets like they did in May, that is going to lead them back into equities," said Peter Loach, managing director of fund research at BMO Nesbitt Burns Inc.

"But money market funds are still going to be a large component of the bank-distributed funds over all."

In May, resource stocks helped the S&P/TSX composite index hit record highs. The index rose 5.6 per cent for the month, and is up 6.4 per cent so far this year.

IFIC estimates that fund sales came in between $2.2-billion and $2.7-billion in May. Money market investments represented about 64 per cent of net sales. In the first quarter, money market funds represented all net sales.

Dennis Yanchus, IFIC manager of statistics, said fund sales in May were "in line with last year," despite the decline. "In previous years, we have seen a much lower drop after RRSP season," he said. In May, 2006, for example, net sales came in only at $414.9-million.

RBC Asset Management Inc., which acquired Phillips Hager & North Investment Management Ltd. last month, was the leader with combined net sales of $1.2-billion.

Among non-bank fund companies, Dynamic Mutual Funds Ltd. attracted $431-million in net sales, followed by Fidelity Investments Canada with $338-million and CI Financial Income Fund with $265-million.

AIM Funds Management Inc., which sells Trimark funds, suffered from $576-million in net redemptions.

© 2007 The Globe and Mail. All rights reserved.

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