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Mutual Fund News

Mutual fund sales take 68% plunge

FUNDS REPORTER

Canadians pumped nearly $1.8-billion into mutual funds in February - the key month in RRSP season - but that was sharply lower from a year ago as stock markets continued their freefall.

It was the second consecutive month of net sales after several months of outflows, but sales were off 68 per cent from a year ago, according to figures released yesterday by the Investment Funds Institute of Canada (IFIC).

Investors continued to plow cash into funds last month even as markets took a thrashing, but an estimated $1.4-billion was parked in money market investments offering little returns but more protection.

"Money market funds are a safe haven" as investors stuffed cash into their retirement savings plans just to get their tax slips, said independent fund analyst Peter Loach.

The S&P/TSX composite index lost 6.6 per cent last month for a one-year loss of 40 per cent. The S&P 500 suffered an 11-per-cent drop in February for a 45-per-cent decline over a year.

The fund sales were "muted from last year, but still relatively good given what is happening in the market," said Dennis Yanchus, IFIC's manager of statistics.

When investors realize how far markets have fallen, Mr. Yanchus suggested they are likely to starting to think about longer-term opportunities.

"For a long-term investor, it is starting to make sense to get back into the market."

It also looks like the more profitable "long-term" stock and bond funds could come back into positive territory in February, but that won't be certain until the final figures are tallied mid-month, he said.

Long-term funds have seen net redemptions every month since last July. These funds are key to the health of the industry, which earns revenue from the higher management fees.

The February estimate does not include data from CI Financial Corp., which is not a member of IFIC. The firm attracted $217-million in net sales, but that number also includes segregated funds, which are not counted by the industry group.

RBC Asset Management Inc. was the leader in net sales, attracting $1.4-billion.

***

How the top 12 fund companies fared in February 2009
Total NetTotal Net
Total NetTotal NetSales ofSales of
Assets ofSales ofLong-TermMoney Mkt
Mutual FdsMutual FdsMutual FdsMutual Fds
Fund($-million)($-million)($-million)($-million)
RBC$90,419$1,411$84$1,328
IGM Financial Inc. $77,985$224$126$98
CI Financial Corp.*n/an/an/an/a
TD Asset Mgmt $44,576-$95$51-$146
CIBC Asset Mgmt $39,951$5$126-$121
Fidelity Invest. Cda ULC$31,598$139$88$51
BMO Financial Group$27,842$39-$3$42
Invesco Trimark Ltd.$25,340-$248-$273$25
AGF Management Ltd.$18,062-$42-$34-$7
Franklin Templeton Inv.$16,833-$97-$106$8
Dynamic Mutual Funds $16,059$109$94$15
Scotia Securities Inc. $15,750$90$52$38

*CI Financial Corp. is not a member of the Investment Funds Institute of Canada. Its figures include mutual and segregated funds.

SOURCE: INVESTMENT FUNDS INSTITUTE OF CANADA, COMPANIES

© 2007 The Globe and Mail. All rights reserved.

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