Fund sales hit hard by market jitters

Working on the front line, it probably comes as no surprise to most advisors that January was not a great month for mutual fund sales. Fears of a U.S. recession coupled with a global sell-off which may have been precipitated by a single French trader, shook investor confidence and sent them running for the exits.

Based on early reports from its members, the Investment Funds Institute of Canada estimates net sales may have seen redemptions of up to $28 million, or positive sales of up to $472 million.

What does seem certain, though, is that investors preferred parking their assets in money market funds, rather than taking on more risky equities.

RBC Asset Management saw an astonishing $1.9 billion in net new assets pour into its money market offerings, while its long-term funds were hit with $199 million in redemptions. The story was similar at TD Asset Management, where $729 million (net) came into money markets, while long-term funds saw $335 million in outflows.

“Strong volatility in capital markets across the world have lead assets in the mutual industry to decline by 3.6% for the month of January,” said Pat Dunwoody, vice president of member services and communications with IFIC. “An estimated $4.5 billion went into money market funds in January, consistent with the trend that was seen in the December 2007 figures. There is clear indication that investors are waiting on the sidelines, looking for some positive signs that capital markets will turn around before they place new investments into long-term funds.”

Preliminary estimates peg total industry assets at between $668.5 billion and $673.5 billion, down approximately 3.62% from last month’s total of $697.3 billion.

Desjardins Funds posted the best topline inflows, with $599 million, but this is largely due to structural shifts in some co-branded funds of funds, converting them into regular mutual funds using a segregated account with a portfolio manager.

Dynamic Mutual Funds managed to post positive sales of $81 million, with Phillips Hager & North rounding out the top three, with net long-term fund sales of $38 million.

Most of the larger fund complexes were hit with redemptions. AIM Trimark saw $818 million in assets walk out the door, while CIBC shed $390 million.

Mackenzie Financial Corp. announced net redemptions of $387.1 million for the first month of 2008, on gross sales of $560.2 million. Long-term funds were hit the hardest by sellers, with $316.2 million in net out-flows. Money market funds were hit by $71.1 million in net redemptions.

Mackenzie’s total assets under management fell 3.7% since the end of January 2007, to $60.2 billion.CI Financial reported net redemptions totaling $490 million, largely as a result of institutional flows. Gross sales totaled $1.03 billion for the month. The company reported mutual fund AUM of $64.3 billion, down from $67.2 billion at the end of December 2007.

“In spite of the high levels of volatility in global markets in January, our core business remains solid,” said Stephen MacPhail, president of CI. “Gross sales of over $1 billion represent an increase over previous months, and our newer initiatives in particular are selling well, including T-Class funds and the SunWise Elite Plus segregated funds.”

From the very large to the relatively small, Mavrix Fund Management also announced its January sales figures, reporting net redemptions of $19.7 million. Total AUM fell 10.3% in the month, to $570.1 million, which is down 19.4% on a year-over-year basis.

“Declining volatile equity markets plus the perception of economic uncertainty by investors gave rise to the results Mavrix posted this month.” said David Balsdon, vice-president and secretary-treasurer.

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