Fund sales ride hot streak into April

The mutual fund industry continued its winning ways in April, with $2.5 billion in net sales, marking the best performance for the month in nearly a decade, according to the latest report from IFIC.

April is traditionally a poor month for sales since it is the first month past the RRSP deadline, says Rudy Luukko, investment funds editor, Morningstar Canada.

“A lot of investors and advisors are looking at getting their tax returns away rather than investment commitments,” Luukko says. “It was the April with the highest sales since back in 1998, when the total was $3.1 billion.”

In fact, April’s sales were 67% higher than they were in 2006, boosting year-to-date net sales of long-term funds to $19 billion, increasing total long-term fund assets to $652 billion, IFIC reports.

Much of this momentum is being fuelled by interest in two key fund categories, global and balanced funds, Luukko says. With $752 million in sales, Global Balanced was the top-selling CIFSC fund category, followed by Canadian Balanced with $597 million in sales, and Global Equity at $583 million.

Luukko says that global equity has been particularly popular for some time now, and regionally the strong European market has attracted a lot of interest, while the traditional domestic categories are being sold off in droves. Domestic equity had more than $620 million in net redemptions for April, adding to a year-to-date redemption total to almost $3.3 billion.

“The main domestic equity categories were all among the net-redemptions, and none more so than Canadian Equity,” Luukko says, pointing out that it had $437 million in net redemptions for the month.

Luukko says that Canadian Income Trust funds also continue to struggle although he doesn’t think they are in the death throes that many expected.

“They’ve shown some resilience in the wake of the October 31 taxation announcement,” he says. “Investment returns in trust-heavy funds have been positive or only slightly negative. In terms of sales, though, they have collapsed, as indicated by the more than $183 million in net redemptions last month from Canadian Income Trust category, which has a year-to-date redemption total of $1.1 billion.”

April was also a mixed bag for fund companies, Luukko says. “There is quite a divergence between companies in their sales figures.”

Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com