Fund redemptions soar in September

Canadian investors lost their nerve in September, yanking up to $5 billion out of mutual funds, according to preliminary estimates by the Investment Funds Institute of Canada. Total net redemptions for the industry were between $4.4 billion and $4.9 billion.

“September saw a sizeable decrease in both assets and sales due to the financial situation in the United States,” said Pat Dunwoody, vice-president of member services and communications with IFIC.

Even RBC Asset Management, until now one of the strongest sellers of funds, saw net redemptions, totalling $1.2 billion. Money market funds accounted for $1 billion of that total, with long-term funds making up the remainder.

“Over the past year, RBC Asset Management has attracted a significant portion of the industry’s net inflows into money market funds,” said Brenda Vince, president of RBC Asset Management. “We now seem to have reached a point where at least some advisors and institutions are redeploying their cash back into the market.”

TD Asset Management posted similar outflows, with $1.15 billion in net redemptions, on gross sales of $1.7 billion. Money market funds made up $894 million of total net redemptions.

“Money market fund net redemptions for this month largely reflected overall market volatility and some spillover from concerns regarding money market funds in the United States,” said Tim Pinnington, president, TD Mutual Funds. “However, despite difficult market conditions, our gross sales remained relatively consistent with our September 2007 results.”

“It is important to keep in mind that the average Canadian mutual fund investor’s portfolio is more diversified today than it was during the last financial downturn. Products that have been popular with investors over the last few years such as fund-of-funds, target-date and lifestyle portfolios are designed specifically to dampen volatility such as was seen in September.”

IFIC estimates that net assets of the industry for the month will be between $631.8 billion and $636.8 billion, down about 8.81% from last month’s total of $695.6 billion.

CI Financial reported net sales of $152 million, on gross sales of $1.1 billion. Long-term fund net sales totaled $126 million, with another $26 million flowing into money market funds.

Mackenzie Financial Corporation announced net redemptions of $137.2 million, on gross sales of $950.1 million. Long-term funds attracted $42.7 million in net new money, due to rebalancing moves by three institutional investors, which drove $257 million into these funds. Meanwhile investors pulled $179.9 million (net) out of money market funds.

AGF Management reported net redemptions in long-term funds, totalling $158 million, on gross sales of $189.9 million.

“Unprecedented market volatility, exacerbated by the barrage of negative news out of the United States, continued to depress industry mutual fund sales and our assets under management in the month of September,” said Blake C. Goldring, chairman and CEO, AGF Management Limited.

Mavrix Fund Management reported net redemptions of $4.0 million on gross sales of $3.6 million.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com

(10/03/08)