September slump for fund sales

(October 4, 2004) For the first time in a year, mutual fund sales dipped into negative territory in September, according to preliminary data from IFIC.

Sales are expected to be between minus $550 and minus $150 million, the fund industry association reported on Monday. Mutual fund sales haven’t been in negative territory since September, 2003.

“Net redemptions are expected to be approximately $350 million. Redemptions from money market funds are expected to be the major proponent,” said IFIC president Tom Hockin. “History shows that sales for the month of September are typically slower than August.”

Net sales were flat in August at just $19 million, revised downward from IFIC’s original figure of $50 million.

IFIC also estimates that net assets of the industry at the end of September will be in the range of $466 to $471 billion, little changed from last month’s total of $468 billion.

Among the major fund companies, the top three, IGM Financial, RBC Asset Management and CIBC Asset Management, all reported net redemptions.

However, RBC’s Brenda Vince noted that despite an outflow of $237 million in money market funds, long-term funds were solid at $190 million. “Net sales of long-term funds remained strong, making September one of the best months on record,” she said.

Fidelity and AIC suffered the worst redemptions in September, at $270 million and $221 million, respectively. Top performers included Brandes — with $156 million in net new sales — and Phillips Hager & North, with sales of $139 million.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com