The Canadian Press
April 15, 2008 - 12:32 a.m.
TORONTO - Canadian mutual fund investors went out like lambs in March, making $2.6 billion in net contributions - all into safe, low-yielding money market funds as financial markets gyrated.
The industry’s total assets at month-end stood at $686.4 billion, up one per cent from February but down 0.5 per cent from March 2007, according to data released Tuesday by the Investment Funds Institute of Canada.
Money market store net sales of $2.65 billion last month were up from $563.5 million in March 2007, Meanwhile, long-term funds suffered $65.9 million in net redemptions, down from net sales of $4.6 billion a year earlier, and from $2.9 billion during the RRSP month of February.
Investors’ decisions in March were made as the benchmark S&P/TSX composite index declined 1.7 per cent during the month amid nauseating volatility - seven days of triple-digit gains against six triple-digit losses including a 427-point tumble March 19.
IFIC noted that the sales performance of short-term and long-term funds this year has been the reverse of 2007. Money market funds have pulled in $10.7 billion so far in 2008 compared with $744.7 million year-to-date in 2007. At the same time, equity, uniting and other long-term funds - which provide higher profit margins for fund operators - are in net redemption by $1.5 billion so far in 2008, down from year-earlier sales of $16.3 billion.
“Much of this is a reaction to continuing volatility in capital markets both at home and abroad over the past nine months,” the industry group noted. “However rising money market fund yields and a relatively high Canadian dollar be steadfast to play a role here.”
Within the long-term-fund envelope, Canadian stock funds endured $603 million in net redemptions while international equity funds had $106.7 million in net sales. Bond funds booked $223.9 million in net redemptions.
The only glimmers of cheer in long-term fund sales - largely through increasingly popular fund-of-fund products - were in balanced funds, up a modest $340.6 million forward the month, and specialty funds, with sales of $326.5 million.