Seeing red: March fund sales drop again after brief recovery in February

(April 15, 2003) After a short-lived respite, mutual fund sales returned to familiar territory last month, with net outflows of $105 million, according to data released today by the Investment Funds Institute of Canada. In the past year, sales have finished in the red every month but one.

Money market funds accounted for all of March’s outflows, with redemptions of $372 million.

“For the second straight month, long-term fund sales were slightly positive at $265 million,” said IFIC president Tom Hockin. “We see some indication that some investors are looking to focus on longer term commitments within their RRSPs.”

Bond and income funds took in the lion’s share of new money last month, nearly $400 million. But stock funds were hit hard again as markets faltered, posting more than $400 million in redemptions. Year-to-date redemptions in the equities categories have reached $1.2 billion, compared to more than $3 billion in net sales last year.

Analysts had expected negative numbers in March, following the end of RRSP season, and most believe fund sales won’t bounce back substantially until well after a sustained market rally.

So far this year, fund outflows stand at $90 million, compared to $9 billion in net sales this time last year, a 101% decline.

Total industry assets fell 1.5% from February to $369 billion. That’s a 17% decline from last year. Assets are now at their lowest levels since 1999.

Gross sales of all funds for the month of March reached $8.3 billion.

All of the top 10 fund companies reported lower sales last month, averaging about a 2% decrease. Manulife, Standard Life, Mavrix, Gluskin Sheff, Dominion Equity and Meritas were among the dozen or so positive finishers.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca