Investors redeem $1.5 billion from funds

Canadian investors sold off mutual funds in July, pushing net redemptions to $1.52 billion, according to the Investment Funds Institute of Canada. That’s near the lower end of preliminary IFIC estimates of between $1.4 billion and $1.9 billion in net redemptions.

The sell-off was nearly double that of June, which saw net redemptions of $834.7 million. Despite the investor exodus, total industry assets increased $9.6 billion or 1.8% from June, to $556.7 billion, due to market gains.

Total industry assets have fallen by 11% on a year-over-year basis. Over the last 12 months, ending July 31, the industry has been hit by $10.9 billion in net redemptions, with long-term assets accounting for $6.7 billon of that total, and money market funds making up the remaining $4.2 billion. Add that to market losses and assets declined by $69 billion.

There is some good news for the industry within the data, however, as the bulk of redemptions came from less lucrative end of the risk spectrum. Investors pulled a net $3.31 billion from money market funds, while long-term funds posted modest net sales of $1.78 billion.

Canadians are not piling into equity funds just yet, though. The biggest selling fund category was Domestic Fixed Income, which saw $793.3 million in net sales. Bond fund assets totaled $62.2 billion at the end of the month, or 11.2% of industry assets.

Balanced funds remained a popular choice, with the domestic group netting $616.1 million and global option taking in a net $504.1 million. Year-to-date sales of balanced funds total $3.33 billion, and investors held $209.5 billion in balanced funds at the end of July, accounting for 37.6% of all industry assets.

Equity fund assets increased $5.6 billion month-over-month, to $213.5 billion (38.3% of industry assets), despite $395.8 million in net redemptions.

Market gains made the Domestic Equity category the winner in terms of growing assets, with a month-over-month increase of $4.06 billion or 3.5%.

Among those asset managers that report sales to IFIC, Scotia Securities was the surprise leader, with $338 million in total net sales. This strong performance boosted Scotia into the top ten in assets under management, edging out Franklin Templeton by a scant half million dollars.

Dynamic Funds extended its streak of strong asset gathering, with nearly $221 million in net sales. TD Asset Management rounded out the top three, with $127 million in net sales.

RBC Asset Management, the country’s largest mutual fund manager, was hit by more than $1.7 billion in net redemptions, as $515 million in net long term fund sales were amply offset by $2.2 billion in money market fund redemptions.

INVESCO Trimark shed nearly $270 million in assets through net redemptions, with almost $246 million pulled out of long-term funds. IGM Financial was hit with $133 million in redemptions, as its Mackenzie division saw $143 million in net redemptions.

Fund of fund products saw $747 million in net sales as a group. Fidelity led that group with $7.5 million in net sales, followed by Northwest & Ethical Investments, with $6.4 million and RBC Asset Management with $4.1 million.

(08/17/09)