Fund redemptions slow in December

The slump in mutual fund sales continued in December, with long-term funds mired in redemptions, but the sell-off has slowed dramatically since its peak in October, according to preliminary sales data from the Investment Funds Institute of Canada.

Industry-wide net redemptions are estimated to be somewhere between $481 million and $981 million, compared to redemptions of $909.8 million in November and $8.4 billion in October.

“Definitely, capital loss planning was a factor last month,” said Pat Dunwoody, vice-president of member services and communications with IFIC. “Investors who sold units earlier in the year when equity markets were at their peak were offsetting some of those gains and reducing their tax burdens by realizing capital losses in December.”

Total industry net assets are estimated to be between $504.6 billion and $509.6 billion, up about 0.37% from November’s total of $505.3 billion.

RBC Asset Management and Phillips, Hager & North announced combined long-term fund net redemptions totaling $433 million. Money market funds attracted $1.1 billion in new sales, however, boosting total sales by $680 million.

“In the current environment, we have been pleased to see continued positive net sales and growth in our assets under management,” said Brenda Vince, president of RBC AM.

Mackenzie Financial announced net redemptions for the month in both long-term funds ($194.6 million) and money market funds ($19.2 million)

TD Asset Management reported long-term fund redemptions totalling $261 million, while money market funds attracted $162 million in new money.

“Investors have clearly been anxious about the volatility we have seen over the last few months, however we have seen some signs that investor confidence appears to be gradually rebuilding,” said Tim Pinnington, president TD Mutual Funds.

AGF Management reported net redemptions of long-term mutual funds totaling $97.3 million for December, on gross sales of $192.9 million.

“History will mark 2008 as a year of extreme economic turmoil and global market volatility that caused investors to stay out of the equity markets,” said Blake C. Goldring, chairman and CEO, AGF Management Limited. “Investment management firms around the world were generally unable to escape these phenomena.”

(01/05/09)