Fund sales stage a recovery

Investors returned to mutual funds in November, reversing the sell-off seen in October, according to the Investment Funds Institute of Canada.

Total net sales for the month were $438.8 million, compared to October’s net redemptions of $291.4 million. Total assets under management climbed $13.8 billion to $586.3 billion in November.

Rising markets certainly helped matters, as investors clamoured to get back in the game.

“Over the past 12 months, we’ve seen an $81 billion increase in assets under management due to improved investment performance alone, which is nothing short of remarkable,” said Pat Dunwoody, vice-president, member services and communications, IFIC.

Long term funds posted net sales of $2.95 billion, while money market net redemptions were $2.51 billion. So far this year investors have bought a net $14.95 billion in long term funds, compared with net redemptions of $11.62 billion in the first 11 months of 2008.

Balanced funds remain popular, with investors buying a net $1.97 billion, up from $1.62 billion a month earlier. Among balanced funds, global balanced led the charge, with $1.067 billion in net sales, compared to $898 million in net sales for domestic balanced funds.

Bond funds attracted $1.46 billion in net sales, up from $1.14 billion in October. On a year to date basis, bond funds have enjoyed net sales of $11.26 billion, making fixed income the most popular among broad asset classes.

The fund-of-funds structure has gained steam, attracting $1.49 billion in net sales in November, and $7.49 billion year-to-date. By contrast, standalone funds as a group saw net redemptions of $1.05 billion.

Fund of funds now account for one fifth of the industry, as $106.3 billion, compared to the $423.8 billion in AUM held in standalone funds.

“Mutual fund investors also increased their focus on diversification in November, most notably by ramping up their contributions into fund-of-funds and bond funds by $360 million and $315 million respectively from the previous month.”

Straight equity funds continued to struggle, however, with net redemptions totaling $516.3 million for the month. Year to date equity funds have seen net redemptions of $5.34 billion, which is far better than the net redemptions of $11.19 billion in the first 11 months of 2008.

Within the equity fund space, global and international funds bore the brunt of redemptions, with 387.5 million pulled out. Investors redeemed $89.3 million from domestic equity funds, and $68 million from U.S. equity funds. Sector equity category fared better, with $28.5 million in net sales.

Over the past 12 months, net sales have only totaled $519.4 million, but there has been a massive shift in asset preference. Investors have pulled a net $11.9 billion out of money market funds, and plowed $12.4 billion into long term assets.

“Growth over the last 12 months directly contrasts with the large decline in total assets over the previous 12 month period,” IFIC stated in its statistical commentary. “Over the 12 months ending November 2008, total assets under management fell by $130.3 billion or 20.5%.”

Fidelity Investments posted overall net sales of $326.1 million, with $365.7 million in net long-term fund sales.

Dynamic Funds was close behind, with $320.3 million in overall net sales, including $342.5 million in net long-term fund sales.

TD Asset Management placed third in overall sales, with $224.1 million, although money market redemptions of $378.6 million masked $602.8 million in long-term fund sales.

In terms of long-term fund sales alone, RBC ranked at the top of the list, with $634.7 million, but $1.144 billion in money market redemptions left RBC with overall net redemptions of $510 million.

Invesco Trimark was hit with overall net redemptions of $361.9 million, with $335.4 million pulled out of long-term funds.

(12/15/09)