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Mutual Fund News

How October's popular funds fared longer term?

swon@globeandmail.com

WHAT ARE WE LOOKING FOR?

Despite the stock market meltdown and record net outflows of $8.4-billion from mutual funds in October, some funds are still seeing more money come in than flow out. Let's look at the top sellers to see whether net sales equate with long-term performance.

TODAY'S SEARCH

We check out the biggest sellers last month among all funds, and a subset - foreign stock funds - in October. We also looked at their longer-term record compared with their peer group until Oct. 31.

There were certainly brave souls who stepped up to the plate as the S&P/TSX composite index plunged 17 per cent in October. The S&P 500 composite index also fell 17 per cent.

WHAT DID WE TURN UP?

There was an eclectic mix among the top 10 sellers from all categories in October, but they were not always above-average performers over the longer haul.

The funds ranged from Dynamic Dollar-Cost Averaging - a parking vehicle for cash before it goes into other Dynamic funds - to Mackenzie Universal Canadian Resource.

Mackenzie Universal Canadian Resource, a specialty fund, lost 51 per cent for the first 10 months compared with 40 per cent for its peers. Over five years, the fund has posted an average annual return of 6.1 per cent, compared with 7.9 per cent for its category.

CI Growth & Income Fund, managed by Gerald Coleman and Stephen Jenkins, was the biggest seller, with net sales of $91-million. Long-term performance was undoubtedly a factor in its sales.

The fund posted an average annual return of 6.1 per cent over five years, compared with the 2.4-per-cent average for its group. The managers also run CI Harbour, which also made it onto the list. It has an average annual return of 8.2 per cent compared with 2.3 per cent for its peers over the same period.

IA Clarington Dividend Growth - T6 was also popular. This fund has an three-year average annual return of 1.6 per cent - slightly better than 0.5 per cent for its peers.

Eric Frape, senior vice-president of product and business development at IA Clarington Investments, attributes that fund's net sales to his firm's marketing of manager Gilbert Lamothe's track record with his other similar fund - IA Ecoflex Dividends. It has been a first- or second-quartile performer on a calendar-year basis since 2002.

The fund also provides a monthly distribution, largely as tax-deferred return of capital that holds appeal for some investors, Mr. Frape said. "That is something that has been driving momentum."

***

Top 10 Funds by Largest Capital Inflows in October % return (as of Oct. 31, 2008)
(As of Oct. '08)PeerPeerPeerPeerPeer
Net SalesAssetsLatestGroupGroupGroupGroupGroup
Fund nameCategory ($-mil)($-mil)MER6-moAvg.YTDAvg.1-yrAvg.3-yrAvg.5-yrAvg.
CI Harbour Growth & IncomeCdn Neutral Balanced916,596.72.3-18.2-15.8-15.7-15.5-18.4-17.11.1-0.76.03.5
Fidelity Canadian Asset Alloc.-ACdn Equity Balanced441,871.92.4-19.1-17.8-17.6-17.6-20.0-19.71.3-1.25.03.0
MDPIM US Equity Pool (Cl A)U.S. Equity30628.71.3-15.9-21.2-19.5-25.4-19.9-26.6-6.6-8.2-3.8-3.8
Mackenzie Univ Canadian ResourceNatural Resources Equity30844.12.4-53.7-44.6-51.0-40.5-50.8-42.8-6.2-4.76.18.8
BMO Harris Diversified Trust PortCdn Income Trust Equity27390.00.1-17.3-21.2-16.7-18.4-18.0-19.41.70.48.38.1
IA Clarington Dividend Growth-T6Cdn Dividend &Incm Equity2639.32.5-19.3-18.5-19.4-19.7-22.9-23.41.6-1.64.2
CI HarbourCdn Focused Equity264,464.62.3-23.3-25.6-20.6-26.4-24.3-29.61.6-2.88.23.7
AGF Canadian Growth EquityCdn Small or Mid Cap Equity23527.52.9-44.1-34.6-47.4-37.2-50.2-40.4-9.2-7.2-0.71.0
Dynamic High Yield BondHigh Yield Fixed Income22299.52.3-9.5-14.7-9.7-14.4-11.0-14.5-0.9-3.22.2-0.3
Dynamic Dollar-Cost AveragingCdn Short Term Fixed Incm21181.81.40.80.81.52.91.93.82.52.82.02.7

***

Top 10 Global Equity Funds by Largest Capital Inflows in October % return (as of Oct. 31, 2008)
(As of Oct. '08)PeerPeerPeerPeerPeer
Net SalesAssetsLatestGroupGroupGroupGroupGroup
Fund nameCategory ($-mil)($-mil)MER6-moAvg.YTDAvg.1-yrAvg.3-yrAvg.5-yrAvg.
MDPIM International Equity PoolCdn Equity20n/an/an/an/an/an/an/an/an/an/an/an/a
CI Cambridge Global Eqt CCGlobal Equity11165.72.4-23.0-26.5-15.6-29.3-31.1-6.3-1.3
Trimark International Companies-AInternational Equity11114.82.5-29.4-32.4-29.1-35.2-32.5-37.1-8.0-7.2-1.9-0.7
PH&N Global Equity-DGlobal Equity1042.61.6-24.9-26.5-26.6-29.3-26.9-31.1-8.0-6.3-4.8-1.3
Mawer World InvestmentInternational Equity10263.41.4-32.4-32.4-33.8-35.2-34.6-37.1-3.6-7.23.0-0.7
Mackenzie Univ International StockInternational Equity9413.12.4-32.6-32.4-35.4-35.2-33.1-37.1-2.6-7.20.7-0.7
Dynamic Power Global Growth ClGlobal Equity8180.92.7-34.4-26.5-41.4-29.3-38.0-31.11.0-6.36.3-1.3
BMO International EquityInternational Equity6453.42.5-31.2-32.4-33.9-35.2-34.6-37.1-8.2-7.2-1.9-0.7
Brandes Global Small Cap EquityGlobal Small/Mid Cap Equity4125.82.6-34.3-33.3-34.0-37.0-39.4-39.9-19.9-9.1-9.4-1.7
DynamicEdge Equity PortfolioGlobal Equity340.32.2-30.3-26.5-29.3-31.1-6.3-1.3

SOURCE: SCOTIA CAPITAL MARKETS, INVESTMENT FUNDS INSTITUTE OF CANADA, GLOBEFUND

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