Mutual fund sales soared in October

Industry assets under management climbed $11.3 billion to $615.9 billion, a gain of 1.9% from September’s total. Market gains accounted for $9.8 billion of that increase. The past 12 months’ have seen Canadians invest $9.76 billion in net fund purchases, up from $2.68 billion in the previous 12 month period.

Investors continued to shift assets into long-term funds, which attracted $2.56 billion in new capital, while money market funds saw $1.01 billion in net redemptions.

Balanced funds remained the preferred option, with $1.98 billion in net sales. So far this year balanced funds have attracted $20.7 billion in net new sales.

Domestic balanced funds attracted 1.137 billion in net new money, while global balanced funds brought in $845 million in net new sales.

Fixed income fund sales were also strong, with $1.37 billion in net sales. While that’s down from September’s $1.68 billion, it highlights the continued low-appetite for risk among Canadians.

Further out on the risk curve, equity funds were hit by net redemptions of $820.6 million. That’s an improvement from the $1.15 billion in net redemptions posted in September, but the past 12 months have seen investors pull $6.59 billion out of equity funds, up from $4.37 billion in the preceding 12 month period.

Net redemptions from global and international equity funds totaled $509 million, compared to $317 million in net redemptions from domestic equity.

Money market fund redemptions of $1.01 billion were a continuation of a trend, as investors have taken $19.5 billion off the sidelines in the past 12 months.

Fund-of-fund products continue to outstrip sales of stand-alone funds, attracting $1.25 billion and $215 million in new sales respectively. The preference is even more visible in the year-to-date numbers. While funds-of-funds have seen $14.1 billion in net sales, stand-alone funds have been hit by $5.8 billion in net redemptions.

On a year to date basis, funds-of-funds have averaged 2% growth in assets per month, compared to 0.9% per month in stand-alone fund asset growth. The fund-of-fund category still has a lot of ground to cover to close the gap with stand-alones, however, with $132 billion and $444 billion in assets respectively.

Among fund companies reporting to IFIC, RBC came out on top, with total net sales of $389 million, followed by Dynamic Funds with $316 million. TD Asset Management posted net sales of $278 million.

IGM Financial posted net redemptions of $194 million, followed by AGF Investments’ redemptions of $112 million and Franklin Templeton’s $71 million.

This is the first month that Invesco Trimark did not report its sales to IFIC, having dropped out of the organization in October.

(11/15/10)