WHAT ARE WE LOOKING FOR?
Which funds are investors snapping up and ditching? In July, investors redeemed $1.5-billion from money market funds to plow the cash into long-term funds. Within this stock-and-bond category, there are winners and losers.
We screened the 10 funds with the highest net sales and outflows during July from figures released by the Investment Funds Institute of Canada. We looked at the year-to-date and one-year returns to July 31, and the longer-term track record of the funds.
WHAT DID WE FIND?
Bond and balanced funds were winners in attracting new money, while many global equity funds were the losers.
Notwithstanding the market rally, many stock funds are still in the red over a year. Memories of last year's market collapse are likely spurring investors to boost bond exposure, or to move back into the market slowly through balanced funds.
While one-year returns like 6.8 per cent for TD Short-Term Bond to 5.3 per cent for Fidelity Canadian Short-term Bond are not spectacular or even replicable every year, they are making investors take a second look at this category. These funds are also attractive replacements for money market funds yielding puny returns in the current low-interest rate environment.
Balanced funds such as Fidelity Canadian Asset Allocation-A and Fidelity Canadian Balanced-A were also attracting new cash in July even though they lost 5.7 per cent and 6.6 per cent, respectively. In this table, they were among the funds with the biggest rebounds this year.
Over three years, both balanced funds have posted an average annual return of about 3 per cent. While that is not spectacular, this number is still at least in positive territory.
Among the big losers in net outflows, five were global equity funds still sitting in red ink over a year. Value-oriented funds have not been in favour in recent years, but they too were not immune to last year's market collapse. And the Canadian dollar rising against the U.S. greenback also hurt returns of foreign equity funds.
Brandes Global Equity and Trimark Select Growth have suffered from steep losses of 24 and 22 per cent, respectively, for the year ended July 31.
The 10-year returns of foreign stock funds have similarly been depressing. Investors in IA Clarington Global Equity, Trimark Select Growth and Templeton Growth Fund have not made a nickel after management fees over a decade. It's understandable why investors have bailed.
|Winners and losers in the battle for long-term mutual fund sales|
|Sales||Assets||Latest||% returns (as of July 31, 2009)|
|TD Short-Term Bond||Cdn Shrt Trm Fxd Incm||108||842||1.05||3.7||6.8||4.9||4.0||4.8||5.2|
|National Bank Mortgage||Cdn Shrt Trm Fxd Incm||79||1,135||1.67||1.1||4.1||4.0||3.9||4.9||5.4|
|Fidelity Canadian Asset Alloc.-A||Cdn Equity Balanced||72||10,402||2.38||17.9||-5.7||3.1||6.7||5.9|
|PH&N High Yield Bond-D||High Yield Fxd Incm||64||1,108||0.93||11.5||11.2||6.9||7.0|
|Dynamic High Yield Bond||High Yield Fxd Incm||62||1,147||2.19||11.9||-3.0||0.6||2.6||-1.3|
|Dynamic Strategic Yield *||Cdn Equity Balanced||61||333||20.7|
|Fidelity Canadian Short Term Bond-A||Cdn Shrt Trm Fxd Incm||61||650||1.43||2.6||5.3||4.1||3.5||4.3|
|IA Clarington Global Value||Global Equity||54||108||2.81||-3.1||-20.7||-11.3||-5.5|
|RBC Canadian Dividend||Cdn Div. & Incm Equity||54||7,933||1.70||19.8||-10.1||0.0||6.4||9.1||11.6|
|Fidelity Canadian Balanced-A||Cdn Neutral Balanced||52||3,295||2.22||15.0||-6.6||2.9||6.1||7.3|
|IA Clarington Global Equity||Global Equity||-56||176||2.48||5.7||-13.1||-7.7||-2.0||-0.4|
|Trimark Select Growth||Global Equity||-44||2,487||2.42||-5.1||-22.2||-11.6||-5.4||-0.3||3.9|
|Investors Real Property-C||Miscellaneous||-41||2,678||2.73||-5.5||-4.7||3.2||4.8||5.5||5.4|
|Trimark Income Growth-SC||Cdn Equity Balanced||-37||4,370||1.64||9.7||-5.0||-1.8||1.4||5.5||6.8|
|Mackenzie Cundill Value 'C'||Global Equity||-34||5,092||2.43||5.2||-12.1||-5.4||0.1||5.1|
|Brandes Global Equity||Global Equity||-34||1,689||2.57||-3.7||-23.5||-14.3||-7.1|
|Bissett Canadian Equity-F||Canadian Equity||-33||1,366||1.27||25.8||-9.2||-1.4||4.7||6.4||9.8|
|Templeton Growth Fund Ltd.||Global Equity||-29||2,214||2.23||1.9||-17.4||-8.6||-2.3||-1.5||2.9|
|Frk Tmp Managed Yield C||Miscellaneous||-28||90||1.42||3.9||3.1|
|Mackenzie Ivy Growth & Income||Cdn Equity Balanced||-26||1,824||2.10||-1.6||-9.5||-3.1||0.5||3.4||6.7|
|DEX Short Term Bond Total Return||2.9||7.4||5.9||5.0||5.7||6.5|
|DEX Universe Bond Total Return Index||3.5||6.8||5.7||5.9||6.5||7.9|
|MSCI World ($ Cdn)||2.1||-17.0||-6.6||-1.3||-2.8||3.9|
|S&P 500 Composite ($ Cdn)||-3.7||-18.0||-9.6||-6.2||-6.1||3.5|
|S&P/TSX Composite Index||20.0||-20.6||-3.0||5.0||4.3||6.5|
|S&P/TSX Total Return||22.5||-17.7||-0.2||7.7||6.5||8.7|
|*Inception Return 3/1/2009|
|Source: GMP Securities; Investment Funds Institute of Canada; Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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