IFIC reports strong fund sales in January

(February 16, 2004) Mutual fund sales continued to strengthen in January, with net new sales of long-term funds hitting $1.8 billion, up from $1.3 billion in December, according to IFIC.

An additional $292.8 million in distributions was reinvested as well, taking the net sales total to $2.1 billion. Gross sales of all funds, including money market funds, hit $12 billion.

“All long-term asset classes experienced an increase in assets from the previous month and overall industry assets are at an all-time high of $452 billion,” said Tom Hockin, IFIC’s president and CEO. “Long-term fund assets in January were $398 billion, the highest ever for the industry.”

Asset values have consistently climbed with improved performance on the equity markets, rising 18.3% from January 2003’s total of $381.6 billion.

Income funds remained the most popular, however, as investors remain cautious of pure equity and balanced funds. Net sales of bond and income funds topped the sales chart, with new net sales of over $860 million, while dividend and income funds racked up just over $699 million in new sales.

“January does show a marked improvement over the recent past,” says Dan Hallett, president of Dan Hallett & Associates Inc. “Stock funds finally crept up into positive net sales territory thanks to positive net sales in Canadian equity funds and falling redemptions in foreign stock funds.

“But this is only materializing after a very strong run in equity markets — a bad sign that past mistakes continue to persist,” he points out. “I’d say this appears to be another example of flows following performance.”

Money market funds continued to experience net redemptions, with investors cashing out to the tune of $81 million for the month, leaving total assets in these funds at $54 billion.

There was little change in the top 10 fund companies, ranked by assets, although CIBC edged out AIM Trimark for the number-three spot, and TD Asset Management took over the number-six spot from CI Mutual Funds, now in seventh place. RBC and Investors Group held on to the top two spots.

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