Mutual fund sales hold up through July

(August 5, 2004) July was another month of positive mutual fund sales, despite declining fortunes in both the equity and fixed income markets, according to preliminary data from the Investment Funds Institute of Canada (IFIC).

“Net sales for the month of July is expected to be approximately $550 million compared with net redemptions of $1.1 billion and net sales of $321 million in July of 2002 and 2003 respectively,” says Tom Hockin, IFIC’s president and CEO. “Of particular note, the majority of July’s sales are expected to be in long-term funds.”

Despite fairly strong sales, net assets under management are expected to have fallen by 1.2% from June, to between $464 billion and $469 billion. Total assets in June hit $476.1 billion.

According to the early estimates, RBC Asset Management saw a month of net redemptions, with $12 million in negative net sales. This is the first month since April — and only the second time this year — that RBC has not posted positive sales. RBC remains firmly in second place for total assets, with $3.7 billion more than CIBC.

Of course the combined assets of IGM Financial, which includes Investors Group, Mackenzie Financial and Counsel Asset Management remained in the top spot, with over $78.3 billion in assets. Net sales were impressive as well, topping the table of early reporters with $151 million in net sales.

The second best seller, according to the early estimates, appears to be Brandes Investment Partners with $137 million, followed by AIM Trimark Investments with net sales of $107 million.

A.I.C. appeared to suffer the highest redemption reported so far, with $144 million in outflows, followed closely by Fidelity, which saw $141 million in redemptions.

C.I. Mutual Funds, which has been plagued by redemptions lately, appears to have stemmed the outflows, with net sales estimated at $54 million.

“C.I. Mutual Funds’ assets are approximated by IFIC based on C.I. reported assets of $42.617 billion excluding segregated funds valued at $1.4 billion, hedge funds valued at $438 million and Assante Artisan Portfolios valued at $963 million on June 30, 2004,” IFIC explains in a footnote to its early report.

Mutual fund performance was less than stellar in July, according to Morningstar Canada, which reported yesterday that 22 of 32 indices declined with the overall equity markets. About the only safe haven to be found was in funds with exposure to the oil industry, as crude prices surged to all-time highs amid supply fears.

Fixed income markets were no kinder to investors earlier in the year, as speculative investors predicted higher interest rates coming in September at the latest.

“Speculation about looming interest rate hikes affected all markets this quarter, although bonds took the greatest hit,” explained Don McDougall, director, BENCHMARK, RBC Global Services. “The TSX was flat, but Canadian equity managers were able to outperform the market by 1.2%, thanks to favourable stock picking in materials, financials and industrials.”

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