Fund values drop, sales firm in March

(April 2, 2004) All good things must come to an end and the run of positive mutual funds returns is no exception. March was a poor month for investors, as 21 of 32 Morningstar Canada Fund Indices turned in negative results, according to preliminary data from the fund industry watcher.

The poor performance didn’t turn investors off altogether, though. The industry rang up sales of between $3.8 billion to $4.2 billion in March, according to preliminary data from the Investment Funds Institute of Canada (IFIC).

“Net sales for the month of March are expected to be approximately $4 billion. This is the sixth consecutive month of positive sales and is substantially higher than sales for March in the past two years,” revealed Tom Hockin, IFIC’s President & CEO. “Sales for the first three months of 2004 are expected to be about $11 billion, outpacing sales in the same period in 2002 and 2003.”

It was the worst month for fund returns since March 2003, which saw 26 indices in the red.

Japanese equity funds were the top performers last month. The index for these funds gained 11.6% in March and 16.7% for the first quarter, as the benchmark Nikkei Average Index continued to post strong returns.

Morningstar Canada’s Precious Metals Index came in second, with a gain of just 3.3%. The remaining nine positive indices were up less than 1%, with the Canadian Income Trust Fund Index leading the pack with a gain of 0.8%.

The most commonly held funds turned in losses, as the Canadian Equity Index shed 1.5%, Canadian Balanced lost 0.8% and Canadian Bond lost 0.4%. The U.S. Equity Index lost 2.9%, Global Equity was down 2.5% and International Equity dropped 2.6%.

The worst performance was in the European Equity Index, which dropped 4.9%, while Science & Technology lost 4.2% and Asia Ex-Japan Equity slid 4%.

The early IFIC data indicates total assets in the fund industry slipped by 0.2% from last month’s total of $466.2 billion to between $462 and $467 billion.

Among the firms reporting for the preliminary report, TD Asset Management led the pack, with net sales of $612 million. Second place went to RBC at $573 million, further strengthening the big bank’s position as number one in net assets, with $44.129 billion.

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