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Mutual Fund News

Investors shift away from money market

FUNDS REPORTER

Canadian investors pulled over $500-million out of mutual funds in October, but all of the cash flowed from money market investments yielding minuscule returns.

The outflows are off sharply from a year ago when investors went on a huge selling binge, yanking a record $8-billion out of funds amid a global credit crisis that sent stock markets plunging.

October was the fifth consecutive month for outflows in the Canadian industry, according to preliminary figures released yesterday by the Investment Funds Institute of Canada (IFIC).

"It's that same trend that we have been seeing most of this year," Dennis Yanchus, IFIC's manager of statistics, said in an interview.

"Overall net redemptions started in June ... but money market fund net redemptions began in April."

Cash is moving from money market investments into long-term stock and bond funds, while the rest is going to alternatives like higher interest-bearing savings accounts or guaranteed investment certificates, Mr. Yanchus suggested.

The net outflows came last month as the S&P/TSX composite index fell 4.2 per cent in October, while the S&P 500 index slipped 2 per cent. The slide came late in the month.

Tumbling stock markets reduced assets under management for the industry to between $569.3-billion and $574.3-billion from $582.7-billion in September, IFIC said.

The assets do not include CI Financial Corp., which stopped submitting data to the industry group in December.

***

Investment tide is turning

How the top 12 fund companies fared in October

Total Total
Total net sales of net sales of
net long-term money market
sales funds funds
Fund companies ($ millions)
RBC-$884$477-$1,361
IGM Financial Inc. -$150-$21-$129
CI Financial Corp.*$191$196-$5
TD Asset Management $158$624-$466
CIBC Asset Management -$108$75-$183
Fidelity Investments Cda$352$406-$54
BMO Financial Group$198$188$10
Invesco Trimark Ltd.-$394-$366-$28
AGF Investments Inc.-$78-$65-$13
Dynamic Mutual Funds $180$322-$142
Scotia Securities Inc. $318$221$97
Franklin Templeton -$201-$175-$26
*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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