Long-term funds packed a punch in April. Assets rose to $443.2 billion from $422.5 billion at the end of March, according to preliminary sales data from the Investment Funds Institute of Canada (IFIC).
The bullish sentiment, however, was once again more due to market affect, than new inflows. Of the $20.7 billion month-over-month increase in long-term fund assets, $20.1 billion was due to market effect and just over $600 million was due to long-term net sales. The equivalent figures for total industry market effect and net sales were $19.9 billion and $400 million respectively.
Long-term fund sales soared to $646.4 million in April, up from net redemptions of $412.8 million in March and $29.4 million in net redemptions in April 2008. The last time long-term fund sales went over the $600 million mark was in February 2008.
“The final data confirms what we saw in our initial forecast — investors are moving back into long-term funds both through new fund sales and through portfolio rebalancing,” said Pat Dunwoody, IFIC’s vice-president, member services and communications.
While there were some signs of renewed investor interest in long-term funds in March, the $276.1 million in Money Market funds redeemed in April coupled, with long-term fund net sales showed the clearest evidence to date that more Canadian investors are starting to feel comfortable about moving back into the market, either because they perceive that markets have passed bottom and are starting to strengthen or because the effects of falling interest rates on the returns of more conservative investments have led them to search out higher yielding options.
Bond fund sales almost touched $2.6 billion year-to-date compared with $236 million at this point last year. Total net sales, however, dipped to $370.3 million in April, from $519.7 million in March and $457.5 million in April of last year.
Though Money Market fund sales were negative overall, U.S. Money Market fund sales were positive as investors took advantage of the appreciation of the Canadian dollar vis-à-vis the U.S. dollar in April. U.S. Money Market fund sales totaled $122 million for the month.
At the other end of the spectrum, Canadian Money Market funds had the highest net redemptions in April at negative $306.3 million. (This compared with $1.26 billion in March and $305.4 million at this point last year.)
Among the broad long-term fund asset classes, bond funds once again led the way in sales in April —touching $834.4, far higher than $568.8 million in March, or $372 million in of ’08.
Balanced funds moved back into positive sales territory in April with $376.3 million in net sales. Balanced fund sales were negative $131.9 million in March and $365.6 million in April of 2008.
Net redemptions for both equity funds and specialty funds slowed from the previous month. Equity funds saw net redemptions of $442.6 million in April, down from net redemptions of $685.6 million in March, while specialty funds had net redemptions of $121.6 million and $164.1 million over the same two periods. Equity fund net redemptions were also less than half of what they were in April 2008.
(05/15/09)