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Investors pull $1.5-billion out of mutual funds in April Add to ...

Canadian investors yanked an estimated $1.5-billion out of mutual funds in April amid concerns that Greece's debt crisis could spill over into other euro zone countries and trigger further havoc in global stock markets. It was the first time the Canadian industry has been in net redemptions since last October when the industry was $291-million in the red, and contrasts with net sales of $370.3-million in the same month a year ago, according to preliminary figures released Tuesday by the Investment Funds Institute of Canada (IFIC).

"We tend to see a drop after RRSP season," but there could be investor jitters over Greece's woes especially with the last downturn still fresh in their minds, Dennis Yanchus, IFIC's manger of statistics, said in an interview. "We noticed a bit more volatility towards the end of the month ... in equity markets, particularly in Europe."

While there was continued net outflows in money market funds, it was the sharp drop in net sales of long-term funds that really put the industry into negative territory, Mr. Yanchus indicated. "It was positive at just over $400-million in April compared with just under $4-billion in March."

Frank Hracs, chief economist at Toronto-based Credo Consulting, said the unusually high net redemptions by one of the industry leaders [Fidelity Investments Canada]contributed to the red ink, but he also agreed that investor nervousness could have taken hold. "During the last week of April, this Greek debt problem was starting to hit the fan and that could have taken some of the edge off of sales."

Fidelity Investments suffered from $425-million in net outflows in April because of a "one-time event" with a client moving management of a co-branded fund in-house, spokesman Chris Pepper said in an e-mail. "It is not reflective of the continued success Fidelity is experiencing."

Despite increased volatility last month, North American stock markets managed to stay in the black. The S&P/TSX Composite rose 1.4 per cent for a year-to-date gain of 4 per cent for the first four months. The benchmark S&P 500 Index nudged up 1.5 per cent for a 6.4-per-cent gain for the same period.

The fund arm of Royal Bank of Canada, which includes RBC Asset Management Inc. and Phillips Hager & North Investment Management Ltd., saw $142-million in net redemptions as investors redeemed money market funds to move into long-term funds or higher-yielding bank alternatives like RBC Investment Savings Account, said Doug Coulter, president of RBC Asset Management.

Among the Canadian publicly traded fund companies, DundeeWealth Inc., which sells the Dynamic Funds, attracted $250-million in net inflows last month. CI Financial Corp., which is not a member of IFIC and whose sales figures are not included in the overall estimate, took in $43-million.

IGM Financial Inc., which includes Investors Group and Mackenzie Financial, saw net redemptions of $239-millon. That included net outflows of $206-million at its Mackenzie arm which lost veteran executive David Feather to Russell Investments Canada Ltd. at the start of the month And AGF Management Ltd., which has been in net redemptions every month since March, 2008, suffered from $172-million in net outflows in April compared with $47.6-million in the same month a year ago. One fund that has seen outflows has been AGF Canadian Balanced since the departure of manager Christine Hughes, However, AGF this week changed the name of the fund, which is being run by Michael White, to AGF Canadian Asset Allocation.

Invesco Trimark Ltd. saw $334-million in net outflows - the second highest after Fidelity Investments.

How the top 12 fund companies fared in April 2010



Total Net Assets of Mutual Funds

($-mil)

Total Net Sales of Mutual Funds

($-mil)

Total Net Sales of Long-Term Mutual Funds

($-mil)

Total Net Sales of Money Market Mutual Funds

($-mil)

RBC

$103,251

-$142

$483

-$625

IGM Financial Inc.

$102,396

-$239

-$145

-$94

CI Financial Corp.*

$64,824

$43

$23

$20

TD Asset Management

$56,953

-$235

$125

-$360

CIBC Asset Management

$46,588

-$30

$99

-$129

Fidelity Investments Canada ULC

$45,902

-$425

-$401

-$24

BMO Financial Group

$35,929

-$272

$33

-$305

Invesco Trimark Ltd.

$28,181

-$334

-$315

-$19

AGF Investments Inc.

$22,423

-$172

-$158

-$14

Dynamic Mutual Funds

$27,774

$250

$266

-$16

Scotia Securities Inc.

$22,877

$47

$206

-$159

Franklin Templeton Investments

$20,640

-$112

-$49

-$63

*CI Financial Corp. is not a member of the Investment Funds Institute of Canada. Its figures include mutual and segregated funds.

Source: Investment Funds Institute of Canada and companies

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