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Mutual Fund News

RRSP season boosts long-term fund sales

Investors continue to ditch money market funds in favour of balanced and bond funds

INVESTMENT FUNDS REPORTER

Canadians stashed about $560-million into mutual funds in January as the registered retirement savings plan season kicked in high gear.

While the net sales were sharply lower than $1.2-billion a year ago, the trend was upbeat for the Canadian industry because it was all in higher-margin, long-term funds, according to preliminary figures released yesterday by the Investment Funds Institute of Canada (IFIC).

There was about $3.2-billion in long-term fund net sales and $2.6-billion in money market net redemptions last month. Long-term funds include stock, bond and balanced funds.

"The investor sentiment is cautious, but positive based on what we are seeing in sales," said Dennis Yanchus, IFIC's manager of statistics.

Mr. Yanchus expects investors to continue to gravitate to more conservative balanced and fund-of-fund offerings as opposed to all-equity funds.

January was the third consecutive month of net sales for the industry, and it came despite a correction in the stock markets. Last month, the S&P/TSX composite index tumbled 5.6 per cent, while the S&P 500 fell 3.7 per cent.

In January, 2009, all the net fund sales were in money market funds - a popular parking vehicle for cash as the stock market continued to crater.

Frank Hracs, chief economist at Credo Consulting, described this January's long-term net sales as running at about 80 per cent of the pace that was seen in January, 2007, "which was part of the best RRSP season in 10 years."

"This time around there continues to be a huge ongoing outflow from money market funds, which highlights the improved investor psychology over the past year or so," Mr. Hracs said.

Dynamic Mutual Funds, which is owned by DundeeWealth Inc., was the leader, attracting $626-million in net inflows. Its long-term fund net sales also included $300-million related to the roll-over of assets into mutual funds from flow-through limited partnerships sold by the Goodman & Co. Investment Counsel unit.

The IFIC figures exclude CI Financial Corp., which has not been supplying data to the industry group since December, 2008. IFIC has adjusted its past figures to reflect the departure of the fund company.

CI Financial attracted $100-million in net sales, but that included both mutual funds and segregated funds.

AGF Management Ltd., however, experienced net outflows, which nearly doubled to $121-million from a year earlier.

Last month, Christine Hughes, an award-winning manager who ran the AGF Canadian Balanced Fund, unexpectedly left the firm for personal reasons. Analysts have said that her fund was AGF's best seller in 2009.

*****

Long-term funds gain

How the top 12 mutual fund companies fared in January

Total Total
Total Total Net Sales of Net Sales of
Net Assets Net Sales Long-Term Money Mkt
of Funds of Funds Funds Funds
Fund company $ millions
Dynamic $24,514$626$645-$19
Fidelity Investments$42,597$263$307-$44
Scotia Securities Inc. $21,365$192$245-$53
CI Financial Corp.*$61,160$100$116-$16
BMO Financial Group$34,468$99$214-$115
CIBC Asset Mgmt $44,743$78$271-$193
TD Asset Mgmt $54,448$63$565-$502
Franklin Templeton$20,494-$7$13-$20
IGM Financial Inc. $97,717-$116$62-$178
AGF Investments$21,898-$121-$114-$7
Invesco Trimark$28,593-$366-$334-$32
RBC$99,523-$486$793-$1,279
*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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