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North American stock markets have found a semi-solid landing, but the outlook for Canada's asset managers isn't any more promising.

Even though market volatility has plummeted in recent months and economic growth figures have confirmed the slow, stable expansion that most people have expected, asset managers continue to experience net outflows, hampering their bottom lines.

As quarterly profits come in, its clear that money managers have yet to change the tide. Gluskin Sheff, for instance, showed improvement this quarter, but net redemptions still hit $82-million and RBC doesn't predict a return to net sales until the end of the year.

Making matters worse, National Bank Financial analyst Shubha Khan notes that two dominant trends are unfolding: investors remain risk-averse, and are therefore moving their money to lower-risk, lower-fee funds; and competition is ramping up both from alternative products, such as exchange-traded funds, and from rival firms.

In Canada, the asset managers with robust offerings of fixed-income and balanced funds have been a bit luckier coming out of the Great Recession, whereas equity funds have seen net redemptions for the past four years. However, Mr. Khan points out that the management expense ratios for fixed-income funds is about 80 basis points lower than for equity funds, and about 30 basis points lower for balanced funds.

Because retail investors have been so skittish, some asset managers have attempted to manage more institutional money. But here too the fees are lower. The financial statements of Fiera Sceptre Inc. and Guardian Capital Group Ltd., which mainly manage institutional money, suggest an average management fee as a percentage of assets under management between 0.20 per cent and 0.25 per cent.

However, there is a bright side for the independent asset managers. Unlike the retail banking sector, Canada's Big Six don't blow everyone out of the water. At the end of 2011, the banks had $331-billion in mutual fund assets under management, versus $475-billion in assets managed by non-deposit-taking institutions.

Plus, of the top five mutual fund sponsors, two are independents: IGM Financial , which has a 13 per cent market share and CI Financial , which has a 7 per cent market share, according to Investor Economics.

Though the overall sector is facing some trouble, the performance of each individual stock varies. Some face more redemptions than others, some have better performing funds. Yet if growth remains anemic, the sector may see some more consolidation -- especially considering that asset managers are prone to it. Over the past decade, CI, AGF and IGM combined have completed $5.5-billion in acquisitions, Mr. Khan noted.