Redemptions slow in November

November was a far kinder month than October for the mutual fund industry, as the pace of redemptions slowed to $909.8 million, according to the Investment Funds Institute of Canada.

That’s a massive improvement over the $8.4 billion record set in October, which marked the depths of this fall’s market decline. Industry assets under management have fallen 3.4% from October’s level, to $552.1 billion. That’s a decline of 20.7% from November 2007.

What money there was coming into the industry was mostly landing in money market funds, which generate very little in terms of management fees. Money market funds saw net sales of $1.6 billion, compared to October’s $137.9 million in net redemptions.

Long-term funds saw net redemptions of $2.4 billion in November, down from $6.5 billion in October. On the whole, equity funds posted $975.7 million in net redemptions, while balanced funds had net redemptions of $955.9 million. Bond funds saw clients withdraw a net $412.7 million.

But there were some signs of life among long-term funds.

“Not all Canadians were waiting on the sidelines last month, however,” said Pat Dunwoody, IFIC’s vice-president, member services and communications. “Within the long-term fund categories, investors purchased $278 million of Canadian Equity funds and $130 million of High Yield Fixed Income funds.”

November 2008’s flows into the Canadian Equity category were not only better than October’s $13.8 million, but also better than November 2007’s $173 million in net positive sales. IFIC speculates that many investors are taking advantage of perceived lows in Canadian stock markets.

That sentiment is obviously not there for other domestic categories. Most notably, Canadian Fixed Income funds experienced the highest net redemptions in November, at $544.2 million.

On a company-to-company basis, it was mainly a bad month. There were a couple of notable exceptions. For instance, Fidelity Investments had a stellar month for sales. The company did more than $264 million in business, with $213 million of that coming in lucrative long-term fund sales.

Fidelity was followed by Manulife, which had $176 million in sales, most of that also in long-term funds. One would assume, given the market conditions, that much of this business would have come from Manulife’s lucrative guaranteed segregated fund business. Sales breakdowns are not disclosed by IFIC, however.

Manulife’s sales success seems to have rubbed off on Mawer Investments, a key sub-advisor for Manulife. The relatively small firm did $20 million in sales of long-term funds last month.

At the other end of the table was CIBC Asset Management, which had $388 million in redemptions overall, more than $333 million of which were in long-term funds. Invesco Trimark had the worst redemptions in long-term funds, at more than $380 million; however, that was slightly offset by nearly $25 million in money market sales.

AIC Limited had one of the worst month-over-month declines in assets. The company lost 7.5% of its asset value in November to bring its year-over-year decline of its assets under management to more than 45%. The company now manages less than $4 billion in funds.