Long-term mutual fund sales grew at a healthy pace in March, and IFIC reported net new sales for the month of $3.6 million. Despite the allure of commodity funds in Canada, investors continued to gravitate toward sustainable income-generating investments and eventually began to believe in the global investing story promoted by fund companies.
The $3.6 billion total increased from $3.3 billion in March 2005. Net sales of all funds, including reinvested distributions, were $4.7 billion for the month. Sales for the quarter reached $9.6 billion, roughly on par with the first quarter results reported in 2005.
“There has been a significant increase in long-term sales, which is the bread and butter of the industry,” says Rudy Luukko, mutual funds editor at Morningstar Canada. “There are significant areas of weakness that are dragging down sales, but most of the action this month is in long-term funds.”
Overall, investors continue to buy domestic equity funds, but they generally appear to prefer blue-chip dividend-paying funds to funds in the mainstream Canadian equity category. Meanwhile, global and international equity funds made reasonable progress during the month, placing global equity funds among the best-selling funds in March, but this trend did not necessarily translate into better sales for everyone in the sector.
Luukko says that “despite positive selling in the global equity category, there were several significant global equity funds that made significant net redemptions. The recovery in global equity sales is not a general trend, rather it appears to be specific to managers.”
For example, the Mackenzie Cundill Value and Mackenzie Cundill Recovery Funds recorded new sales of $257 million and $211 million last month, while the Fidelity Northstar Fund was second in this category with $145 million in new sales. In comparison, many major global equity funds, including AGF International Value, Templeton Growth and Trimark Select Growth, recorded net redemptions during the month.
Trimark Income Growth was among the most traded funds during the month, with net redemptions of $330 million. In addition to the Mackenzie Cundill Value and Recovery Funds, CIBC’s Signature Canadian Balanced Fund and TD’s Canadian Bond Fund round out this month’s best-selling CIBC Monthly Income Fund.
The five best-selling categories this month include Canadian Dividend Funds, Canadian Balanced Income Funds, Canadian Balanced Funds, Global Equity Funds and Canadian Bond Funds. The most frequently redeemed categories this month included Canadian money market funds, Canadian equity funds, U.S. money market funds, science and technology funds and Canadian tactical asset allocation funds.
Top-selling companies include RBC Asset Management with net new sales of $719 million, TD Asset Management with net new sales of $592 million and Mackenzie Financial Corporation with net new sales of $332, followed by Bank of Montreal, Investors Group and Dynamic Mutual Funds. The laggards included AIM Trimark with $668 of net redemptions and AIC with $140 million of net redemptions recorded, followed by CIBC Asset Management with $70 million of net redemptions.
At AIC, the most frequently mentioned fund was the AIC Diversified Canada Fund with net redemptions of $59 million. Meanwhile, much of AIM Trimark’s redemptions can be attributed to changes in the composition of the separate Clarica funds. In March, CI Financial changed sub-advisers on four of its Clarica spin-off funds, replacing the core AIM Trimark funds with CI-managed funds. More than $360 million changed hands as a result of the management changes, increasing CI’s monthly net sales to $772 million.
While bond funds have significantly lower returns than they did a few years ago and that’s unlikely to change in the near term, they are still seeing positive net sales as part of a broader trend in which Canadians are favoring high-yielding, long-term funds, Luukko notes. “Overall, long-term income-generating categories have reasserted their dominance in fund sales.”
Filed by Kate McCaffery, Advisor.ca, kate.mccaffery@advisor.rogers.com
(17/04/06)
