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Mutual Fund News

Cautious investors flock to balanced, bond funds

FUNDS REPORTER

Canadian investors flocked to balanced and bond funds in October as rallying North American stocks markets lost steam, and fell into the red.

Balanced funds attracted nearly $1.6-billion in net sales last month, while bond funds brought in $1.1-billion, according to figures released yesterday by the Investment Funds Institute of Canada (IFIC).

In October, the industry also suffered from $2.5-billion in net outflows of money market funds as investors searched for higher yields elsewhere.

While the industry earlier estimated that there was about $500-million in total net redemptions in October, the final figure came in at $291.4-million. Last month's number, however, pales with net outflows of $8-billion in the same month last year amid a market meltdown.

While stock markets have been rebounding since their lows in March, the S&P/TSX Composite Index tumbled 4.2 per cent in October, and the S&P 500 fell 2 per cent.

Investors' reluctance to jump into pure stock funds means they still have the jitters after last year's severe market downturn, or want more diversification in their portfolios, suggested Dennis Yanchus, IFIC's manager of statistics.

The trend toward growing net sales in long-term funds began in April, and has been steadily increasing each month since July. Net sales of long-term funds - a key indicator of health for the industry because they charge higher fees - totalled $2.2-billion in October.

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October mutual fund sales

Net Sales ($-millions)
Broad Asset Classes Oct 2009 Sep 2009 Oct 2008 YTD
Equity Funds-512.2-1,012.5-2,402.5-4,830.3
Balanced Funds1,619.01,318.0-2,570.17,505.4
Bond Funds1,140.61,658.8-915.89,802.6
Specialty Funds-3.310.5-47.8-475.4
Long-Term Funds Total 2,244.1 1,974.7 -5,936.1 12,002.3
Short-Term Funds-2,535.5-2,708.6-2,023.6-11,173.1
Total Industry -291.4 -733.9 -7,959.8 829.2
Source: Investment Funds Institute of Canada

© 2007 The Globe and Mail. All rights reserved.

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