Working on the front lines, it’s probably no surprise to most advisors that January wasn’t a good month for selling mutual funds. Fear of a U.S. recession, combined with a global sell-off that could have been triggered by a single French trader, shook investor confidence and sent them fleeing.
Based on early reports from its members, the Canadian Mutual Fund Institute estimates that the net sales could result in up to $28 million in redemptions or up to $472 million in positive sales.
However, it seems certain that investors preferred to invest their assets in money market funds rather than invest in riskier shares.
RBC Asset Management saw an astonishing $1.9 billion in net new assets flow into its money market offering, while its long-term funds saw $199 million in redemptions. A similar situation occurred at TD Asset Management, where $729 million (net) flowed into money markets, while $335 million outflowed from long-term funds.
“High volatility in capital markets around the world resulted in a 3.6% decline in leading mutual assets in January,” said Pat Dunwoody, vice president of member services and communications at IFIC. “An estimated $4.5 billion flowed into money market funds in January, consistent with the trend seen in December 2007 data. “It is clear that investors are waiting on the sidelines, looking for positive signs that capital markets will turn around before investing in long-term funds.”
Preliminary estimates put the industry’s total assets at between $668.5 billion and $673.5 billion, down about 3.62% from last month’s total of $697.3 billion.
The Desjardins Funds saw the largest inflows with $599 million, but this was largely due to structural changes in some of its co-branded funds, converting them into regular mutual funds using a separate account held by the portfolio manager.
Dynamic Mutual Funds had positive sales of $81 million, with Phillips Hager & North rounding out the top three with net long-term fund sales of $38 million.
Most of the larger fund complexes have been hit by redemptions. AIM Trimark lost $818 million in assets and CIBC lost $390 million.
Mackenzie Financial Corp. announced that for the first month of 2008, net write-offs were $387.1 million, on gross sales of $560.2 million. Sellers were hardest hit in long-term funds, with net outflows of $316.2 million. Money market funds saw net redemptions of $71.1 million.
Mackenzie’s total assets under management fell 3.7% from the end of January 2007 to $60.2 billion. CI Financial recorded net redemptions totaling $490 million, primarily due to institutional flows. Gross sales were $1.03 billion for the month. The company said mutual fund AUM was $64.3 billion, up from $67.2 billion at the end of December 2007.
“Despite the high volatility in global markets in January, our core business remains strong,” said Stephen MacPhail, CEO of CI. “Gross sales of over $1 billion represent an increase over prior months, with our newer initiatives, including the T-Class Funds and spin-off SunWise Elite Plus Funds, selling particularly well.”
Ranging from very large to relatively small, Mavrix Fund Management also announced January sales results, showing net redemptions of $19.7 million. Total AUM declined 10.3% for the month to $570.1 million, down 19.4% year-over-year.
“Declining stock market volatility and investor perceptions of economic uncertainty underpinned the results reported by Mavrix this month.” said David Balsdon, vice president and secretary-treasurer.
Submitted by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com
(02/04/08)
