The great disconnect: Fund sales continue to slump as performance improves

Tactical fund managers bullish on equities, analyst says (July 15, 2003) Canadian investors continue to bail out of mutual funds, despite three straight months of strong fund performance amid a burgeoning stock market rally. According to data released today by IFIC, net fund redemptions reached $577 million in June. That’s a slight improvement from May, […]

By Doug Watt | July 15, 2003 | Last updated on July 15, 2003
2 min read
  • Tactical fund managers bullish on equities, analyst says
  • Fund sales stumble again in May
  • Mutual fund sales take April hit as investors ditch money market funds
  • Marketing frontlines: “Will I be OK?”
  • Bear necessities: Preserving your clients’ wealth in down markets

    Stocks have also enjoyed a positive run of late. Year-to-date, the S&P/TSX Composite index is up more than 7% while the S&P 500 has climbed 14%.

    Money market funds accounted for all of June’s net redemptions, with outflows of more than $1 billion. Long-term funds had net sales of $432 million, as gains in the bond/income and dividend/income categories offset outflows of nearly $500 million in Canadian and foreign equity funds.

    “Given the pain that many investors have endured over the past three years, it’s going to take more than a strong quarter or two to lure investors back into stock funds, which is really the main long-term segment that continues to be mired in net redemptions,” comments Dan Hallett, who runs an independent investment research firm in Windsor, Ontario.

    Hallett says a more positive economic picture combined with steadier returns is needed before people start buying stock funds again. “The sad part is that by the time that happens, many will have arrived late to the party,” he told Advisor.ca.

    Total fund assets rose 0.8% from May to $390.8 billion, but are down 6% from the same time last year. Gross June fund sales totalled $8.1 billion. Year-to-date, net fund redemptions have climbed to nearly $3 billion, a far cry from last June’s first-half net sales of more than $7.6 billion, Hallett says.

    Morningstar’s top performing category in June was the Japanese Equity Fund Index, rising 5.4%, followed by other Asian and emerging markets sectors.

    But despite impressive numbers in June, Japanese and Asian funds remain firmly in the red for the first half of the year, Tingling notes.

    “With the exception of emerging markets, the Japanese and Asian fund indices are among this year’s worst year-to-date performers, and also among the worst over the past one- and two-year periods,” he said. “These indices have some pretty deep holes to climb out of.”

    Less than one-third of Morningstar’s 32 fund indexes have managed positive returns over the past year.

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

    (07/15/03)

    Doug Watt

  • Tactical fund managers bullish on equities, analyst says
  • Fund sales stumble again in May
  • Mutual fund sales take April hit as investors ditch money market funds
  • Marketing frontlines: “Will I be OK?”
  • Bear necessities: Preserving your clients’ wealth in down markets

    Stocks have also enjoyed a positive run of late. Year-to-date, the S&P/TSX Composite index is up more than 7% while the S&P 500 has climbed 14%.

    Money market funds accounted for all of June’s net redemptions, with outflows of more than $1 billion. Long-term funds had net sales of $432 million, as gains in the bond/income and dividend/income categories offset outflows of nearly $500 million in Canadian and foreign equity funds.

    “Given the pain that many investors have endured over the past three years, it’s going to take more than a strong quarter or two to lure investors back into stock funds, which is really the main long-term segment that continues to be mired in net redemptions,” comments Dan Hallett, who runs an independent investment research firm in Windsor, Ontario.

    Hallett says a more positive economic picture combined with steadier returns is needed before people start buying stock funds again. “The sad part is that by the time that happens, many will have arrived late to the party,” he told Advisor.ca.

    Total fund assets rose 0.8% from May to $390.8 billion, but are down 6% from the same time last year. Gross June fund sales totalled $8.1 billion. Year-to-date, net fund redemptions have climbed to nearly $3 billion, a far cry from last June’s first-half net sales of more than $7.6 billion, Hallett says.

    Morningstar’s top performing category in June was the Japanese Equity Fund Index, rising 5.4%, followed by other Asian and emerging markets sectors.

    But despite impressive numbers in June, Japanese and Asian funds remain firmly in the red for the first half of the year, Tingling notes.

    “With the exception of emerging markets, the Japanese and Asian fund indices are among this year’s worst year-to-date performers, and also among the worst over the past one- and two-year periods,” he said. “These indices have some pretty deep holes to climb out of.”

    Less than one-third of Morningstar’s 32 fund indexes have managed positive returns over the past year.

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

    (07/15/03)