Calculation error reduces May fund sales

(June 16, 2004) Net new sales of mutual funds reached $533 million last month, IFIC says, well short of the preliminary estimate of $800 million. IFIC blames the discrepancy on a reporting error from BMO Investments, which supplied the fund industry association with incorrect data.

“Net sales for the month of May were positive for the eighth straight month,” says IFIC president Tom Hockin, adding that fund industry assets have gained nearly $35 billion this year, to $474 billion.

The May sales totals were the highest for the month since 2001, but that’s “mainly a commentary on just how bad the past two years have been for the industry,” says Rudy Luukko, investment funds editor at Morningstar Canada.

Luukko notes that more than half of last month’s new sales were in money market funds, traditionally attractive to investors who remain wary of the stock markets. Dividend and income, and bond and income funds were again the most popular categories, generating $321 million and $278 million respectively in new sales.

But Canadian stock funds suffered net redemptions to the tune of $245 million, while foreign shares shed $188 million.

Among fund firms, the big banks continued to dominate, Luukko says, with four of the top five spots in May. Three independent firms had the largest net redemptions: AGF, AIC and Fidelity.

IFIC has also changed its reporting procedures, combining the assets of Investors Group, Mackenzie Financial and Counsel Wealth Management under the IGM Financial umbrella. That adjustment makes Winnipeg-based IGM Financial far and away the top fund complex in the country, with assets of $78.7 billion. RBC is a distant second, at $44.2 billion.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com