May fund sales slump with the markets

Canadians were a little more cautious in funding their mutual fund portfolios in May when the current market correction began. Net new sales totaled $411 million, while reinvested distributions of $574.3 million boosted total net sales to $985 million.

Foreign equity fund sales remained strong, totaling $338 million for the month, or $2.3 billion year to date.

“Investors are making use of one of the major benefit of mutual funds — the ability to diversify — in this case geographically,” says Joanne De Laurentiis, president and CEO of IFIC. Overall assets under management slipped from $608 billion for the industry in April, to $591.7 billion by the end of May.

“What had to hurt sales in the last month was the general poor performance by stock markets around the globe,” says Rudy Luukko, investment funds editor at Morningstar Canada, pointing out that the net new sales number reported was the lowest since 2003. “Even if you strip out the redemptions in money market funds, it was kind of a glass half full, glass half empty month.”

In Canada, market declines were led by a sell-off in the commodities sector. While the markets were declining, investors sought refuge in the more stable ends of the Canadian equity pool. About $342 million found a new home in the Canadian Income Balanced category, making it the top seller. Canadian Dividend and Canadian Balanced funds were also popular, with net inflows of $265 million and $210 million, respectively.

Foreign investments ranked high on the shopping list, with the Global Balanced and Asset Allocation category garnering $169 million in net sales, while an additional $162 million flowed into Global Equity.

CI Investments headed the list of best selling fund complexes, posting net sales of $293 million, followed by RBC with sales of $267 million. Dynamic rounded out the list of top sellers with sales of $110 million, while Acuity sold $102 million. Overall sales for Investors Group, including Mackenzie and Counsel Wealth, totaled $93 million.

Among those worst hit by redemptions were some of the banks, which suffered from the stampede out of low-yielding money market and other short-term fixed income vehicles. Of the non-bank fund manufacturers, equity products led redemptions.

CIBC, for example, saw net outflows of $313 million, with the lion’s share coming from the CIBC Premium T-Bill (-$81 million) and CIBC Money Market fund (-$66 million).

The company with the second highest redemptions, AIM Trimark, saw $281 million in outflows. The largest source of these outflows were the Trimark Income Growth (-$86 million) and Trimark Select Growth funds (-$64 million).

Rounding out the “bottom five” were AIC, with redemptions of $171 million, National Bank Securities, which saw $92 million in outflows, and TD, with $70 million in redemptions.

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