(July 15, 2005) Canada’s mutual fund industry reported $1.8 billion in net new sales in June, the most since 1998. IFIC data suggests investors continue to choose long-term investments. At the same time, industry competition and consolidation of clone funds are starting to impact sales.
Total assets under management increased 1.3% since May to an all-time high of $526.8 billion. This is also the eighth time in the last 10 months that assets have increased. Gross sales for the month, including money market funds, were $13.7 billion.
“Virtually all of the sales, across the industry, were in the long-term categories,” says Rudy Luukko, editor-in-chief of Morningstar Canada mutual funds. He says investors continue to avoid global equity funds in favor of Canadian balanced funds, bond funds, dividend funds and income mutual funds.
“Long-term, domestic and income-oriented were the core characteristics of all the best-selling funds,” Luukko says. Meanwhile, global equity funds suffered nearly $208 million in net redemptions last month, making the category the biggest laggard.
On an individual basis, the RBC Monthly Income Fund earned nearly $219 million in June, making it one of the best-selling funds, while both Fidelity Northstar and Fidelity International Portfolio benefited on paper from the company’s efforts to eliminate a range of RSP clone funds. . In June, the funds reported $504 million and $334 million in net new sales, respectively, primarily as a result of how transfers from RSP clones were reported.
“Over the next few months, this pattern will repeat itself across the industry,” Luukko says. On June 24, Fidelity liquidated 17 clone funds, affecting nearly $1.2 billion in assets.
Meanwhile, changes in competition and strategic managers affected sales of the third- and fourth-place bestsellers.
Synergy Tactical Asset Allocation and Synergy Canadian Class funds recorded new net sales of $241 million and $231 million, respectively, as parent CI Investments removed the Fidelity Canadian Asset Allocation and Fidelity True North funds from its spin-off Clarica fund portfolios in favor of two Synergy funds .
In all, Fidelity suffered net losses of $615 during the month, losing $362 million from CI and another $178 million from similar changes by TD. Luukko says both moves resulted from the firm’s specific decisions to use in-house asset managers “rather than condemning Fidelity’s attributes as an investment manager.”
After Fidelity funds, AIC Diversified Canada had a difficult month with net redemptions of $190 million, and the TD Dividend Growth fund lost almost $185 million.
Overall, CI was the top performer with net new sales of $519, including funds transferred from Fidelity, TD was second with net new sales of $474 million, and RBC Investments was third with $431.
Fidelity is among the laggards, followed by AIC with net redemptions of $380 million and AGF with net redemptions of $169 million for the month.
Filed by Kate McCaffery, Advisor.ca, kate.mccaffery@advisor.rogers.com
(15/07/05)
