Fund sales slow after RRSP season

Mutual fund sales slowed in March, as the deadline for RRSP contributions passed, according to the latest data from the Investment Funds Institute of Canada (IFIC).

Net sales in March were $1.64 billion, with $3.96 billion in long-term fund sales offset by money market redemptions totalling $2.32 billion. In February, total net sales had been $3.1 billion, but March’s sales were nearly $1 billion higher than January’s $693.5 million.

“Net flows slowed overall in March as is usual given the end of RRSP season (on March 1) however flows were stronger than they have been over the past few years for the month of March,” IFIC said in its statistical summary.

Total industry assets under management were $618 billion at the end of March, topping $600 billion for the first time since August 2008.

Investors continued to show a strong preference for balanced funds and fixed income funds. Balanced funds raked in $3.39 billion in net new money, compared to net redemptions of $131.9 million in March 2009. Fixed income products posted net sales of $1.04 billion, compared to $568.8 million a year earlier.

Global balanced funds saw slightly better sales than domestic balanced, at $1.70 billion and $1.69 billion, respectively. Global neutral balanced has been the best selling asset class for four of the past five months.

On the fixed income side, there clear choice was domestic, which posted $843 million in net sales, compared to $196 million in the global and high yield category.

Equity funds sales hit the skids, however, with net redemptions totaling $502.6 million. That’s better than the $685.6 million in net redemptions posted in March 2009, but reverses gains made in February, when net sales totaled $104.5 million.

Within the broad equity fund category, only U.S. equity funds posted positive net sales, at $17 million. Global and international funds were hit hard by $409 million in net redemptions, while investors pulled a net $80 million out of domestic equity funds.

Fund-of-fund sales totaled $2.18 billion, up from $183.1 million in March 2009, but down from $2.59 billion in February 2010.

For the first quarter of 2010, net fund sales were $5.42 billion, up from $3.37 billion in Q1 of 2009. Net long term fund sales for the quarter were $12.18 billion, compared to net redemptions of $348.4 million in Q1 of 2009.

Among individual firms that report sales to IFIC, Dynamic Funds led the pack with $529.8 million in overall net sales, including $539.2 million in net long-term fund sales.

Fidelity Investments Canada posted total net sales of $467.2 million to take second place in the sales derby, followed by TD Asset Management with $377.6 million.

Invesco Trimark posted the heaviest net redemptions, at $516.2 million, followed by Franklin Templeton ($289.6 million) and BMO Financial Group ($179.6 million).

(04/15/10)