November fund sales top $2 billion

Mutual fund sales jumped nine-fold in November compared to last year, to $2.3 billion. It’s the best sales total for the industry since March and the strongest November since 2001.

“It was generally a hearty month for the industry in terms of aggregates sales numbers,” says Rudy Luukko, investment funds editor at Morningstar Canada. “The mix of sales was also very positive for the industry.”

“All of the sales growth was in the long term asset categories, which of course are higher margin products for the industry.”

Banks again led the way in November. BMO Investments posted $348 million in net new sales followed by RBC Asset Management and TD Asset Management with net new sales of $340 million and $323 million respectively.

But independent fund companies also did well. CI Investments ranked fourth overall with $296 million in net new sales, followed by Mackenzie Financial, Dynamic Mutual Funds and Franklin Templeton Investments.

“The positive sales trend is more broadly based than it has been in recent months,” say Luukko. “There is something of a comeback being staged by the independents.”

Laggards for the month include Scotia Securities with $176 million in net redemptions, AIC Limited at $173 million and AIM Trimark with net overall redemptions of $92 million, due to redemptions in the company’s flagship global equity fund. Scotia notes that when its Partners Portfolios are taken into account, redemptions fall to $80 million.

The four top selling Canadian Investment Funds Standards Committee (CIFSC) categories for the month were Canadian income balanced, with $703 million in net new sales, Canadian bond at $675 million, Canadian dividend at $646 million and Canadian balanced at $360 million.

Interestingly enough, the largest CIFSC category by assets was also the most redeemed category during the month of November. “Canadian equity led all other categories with net redemptions of $307 million,” says Luukko. “This is still an area of weakness for the industry. It’s a bread and butter category with $92.5 billion in assets, according to IFIC’s last report.”

According to Morningstar data, median Canadian equity mutual funds returned 12.3% year to date, and have three year median returns of 14.9%.

“These are above the historical averages and yet, surprisingly, Canadians are shunning this particular category,” Luukko notes. “The types of Canadian stock funds that investors are favouring these days are those that are dividend oriented. It’s not a total aversion to the Canadian equity market, but investors are preferring a certain investment style within the domestic equity category.”

Top selling funds include the CI Signature Dividend fund with $167 million in net new sales, followed by the RBC Monthly Income fund with $157 million in new sales. The top bond fund, the TD Canadian Bond Fund, pulled in $140 million in new sales.

Industry assets climbed to $556 billion, up 3% from October.

Filed by Kate McCaffery, Advisor.ca, kate.mccaffery@advisor.rogers.com