Fund sales pummeled in August: IFIC

The mutual fund industry took a hit in August, as market volatility not only impaired returns, but also took a bite out of sales — a big bite. Based on a preliminary sample of reports from its members, IFIC estimates that the industry as a whole slipped into net redemptions, with investors pulling out between $1.3 billion and $1.8 billion.

Not surprisingly, money market funds bore the brunt of the exodus, as concerns over the liquidity of non-bank asset backed commercial paper spooked the market. The finance industry quickly stepped in to provide liquidity, buying back affected assets from their money market funds, but apparently that was not enough to calm investors.

“The issues surrounding asset-backed commercial paper rippled through different sectors of the economy,” said Pat Dunwoody, vice-president of member services and communications with IFIC. “As such, it was not unexpected that some investors would leave money market funds.”

Total industry assets under management are projected to have declined by 1.05%, to between $693.6 million and $698.6 billion, from July’s total of $703.4 billion.

TD Asset Management was hit particularly hard, with net redemptions totalling $543 million for long-term funds and money markets — money markets alone accounted for $457 million in outflows.

National Bank Group, which announced a massive buy-back of ABCP, announced total outflows of $446 million, $360 million of which was from money market funds.

CIBC Asset Management saw combined net outflows of $354 million, with $193 million coming out of long term funds, and $161 million out of money markets.

Not everyone was losing assets, though. Scotia Securities posted combined net sales of $113 million, propped up by $137 million in new long-term money.

Franklin Templeton Investments also posted positive sales, totalling $61 million, including $30 million in new money market investment.

AIM Trimark Investments also managed to move $38 million in money markets, but was hit by $137 million in long-term fund redemptions.

RBC Asset Management announced net long-term fund sales of $51 million for the month, applauding personal investors who “stayed the course with their investments in mutual funds.” RBC’s money market offerings saw an exodus of $115 million, however, putting the bank’s overall fund sales tally in the red to the tune of $64 million.

“Money market redemptions were primarily in non-personal accounts and the flows into money market funds were modestly positive for personal investors,” RBC explained in a press release.

Over the past 12 months, RBC posted net sales of $7.3 billion, including $6.2 billion in long-term net sales and $1.1 billion in money market net sales. Total assets under management have risen by $12.2 billion or 18% over the same period.

CI Investments announced net sales of $59 million in its retail fund division, on gross sales of $595 million. Year-to-date, CI has posted net sales of $1.5 billion. As of August 31, CI’s mutual retail fund assets under management totaled $64.1 billion.

“We’re pleased that our retail fund sales continued to be positive in the face of the extreme volatility on financial markets in August,” said president Stephen A. MacPhail in a press release.

Mackenzie Financial announced net redemptions of $269.8 million, on gross sales of $566.3 million. Money market funds saw the greatest outflows, totaling $201.6 million, while long-term funds were hit by $68.2 million in redemptions.

Total assets under management were up 19% from August 2006, at $63.7 billion. Retail mutual funds accounted for $47.4 billion of that total, with institutional and sub-advised assets totaling almost $16.4 billion.

AGF Management reported net long-term fund sales of $37.3 million for the month, on gross sales of $366.7 million. Unlike many competitors, however, money market redemptions were relatively tame at $1.8 million, leaving overall fund sales in the black at $35.5 million.

“Our business remains strong through this volatile time in the markets,” said Blake C. Goldring, chairman and CEO of AGF Management Limited. “We appreciate the support from advisors and will continue working closely with them to help their clients achieve their long-term financial goals.”

AGF’s total mutual fund AUM hit $30.0 billion as at August 31, 2007.

Desjardins Group announced net sales of $68.6 million in August, bringing total net sales for the year to $1.6 billion, while total AUM has reached $12.1 billion.

Mavrix Fund Management reported net redemptions of $11.1 million on gross sales of $8.5 million in its mutual fund division.

Total AUM decreased by 5.43% in August to $681.4 million, with a year to date decrease of 0.73%. Total AUM has risen by 3.92% on a year-over-year basis, though.

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

(09/05/07)

Steven Lamb