Fund sales bloomed in May

(June 15, 2005) Canada’s mutual fund industry attracted more than $1 billion in net new sales in May, something of a surprise since the month usually marks the beginning of the summer slowdown.

May’s sales total of $1.1 billion was about double April’s $567 million and significantly higher than the same month in 2004.

“The relevant comparison is year-over-year and in that respect there’s been a large gain in sales,” says Morningstar Canada investment funds editor Rudy Luukko. “We have long term sales of $1.4 billion versus only $254 million a year earlier. So that’s a positive development for the industry.”

IFIC president Tom Hockin added that long-term fund sales were the highest for the month of May since 1998. “May’s new sales have propelled the industry’s assets to a record $520 billion,” he said.

Gross sales for all funds in May, including money market funds, totalled $10.6 billion. Although money market funds as a category were in net redemptions, to the tune of $342 million.

Balanced funds were the top-selling category, with nearly $786 million in net sales, while dividend and income funds attracted $778 million. However, there were redemptions in all the stock fund categories, including foreign common shares, off $307 million and Canadian common shares, down $185 million.

“The recovery in sales is narrowly-based, both among fund category types and firms, so it’s not a rising tide lifting all boats,” Luukko notes.

Funds in the new Canadian Income Balanced category were the sales leaders in May, led by RBC Monthly Income, followed by AIM Trimark Growth and BMO Monthly Income.

Fidelity placed two funds in the top 10 last month and as a result, the firm was lifted out of negative territory, with $25 million in net new sales.

RBC topped the charts among fund companies, followed by TD and Phillips, Hager & North. The two main laggards were AIC, off $279 million and AGF down $205 million.

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