Mutual fund sales plunge in April
SHIRLEY WON

Globe and Mail Update

May 2, 2008 at 5:30 PM EDT

Mutual fund sales in Canada plunged sharply to about $300-million in April, from $2.5-billion a year ago.

All the cash continued to flow into money market funds as it has done for much of this year, according to preliminary figures released Friday by the Investment Funds Institute of Canada.

“It's surprising, because we did see some pretty good equity markets last month,” Dennis Yanchus, manager of statistics and research at IFIC, said in an interview.

In April, the S&P/TSX Composite Index rebounded 4.4 per cent after falling 1.7 per cent in March. In the United States, the benchmark S&P 500 Composite Index jumped 4.8 per cent last month.

It will probably take “a few months” before investors become confident about jumping into long-term funds, he said.

The April sales number is a continuation of a trend in March and January when all the net sales in mutual funds went into money market investments. In the first quarter of this year, sales of money market funds hit a record high of $10.7-billion.

April's estimate stems from IFIC's projections that net sales would come in between $57-million and $557-million.

The April number is not only down substantially from 2007, it is also off from $468-million in net sales in the same month in 2006 and $540-million in 2005, Mr. Yanchus added.

The leader in net sales last month was the mutual fund arm of Royal Bank of Canada, which took in $760-million. Dynamic Mutual Funds Ltd. attracted a robust $274-million.

Among the non-bank fund companies, Fidelity Investments Canada brought in $171-million, and CI Financial Income Fund attracted $170-million in net sales.

AIM Funds Management Inc., which has seen three key managers leave the firm and has suffered from poor performance in its value-oriented funds, suffered from $653-million in net redemptions.

The fund arm of Canadian Imperial Bank of Commerce saw $263-million in outflows, while IGM Financial Inc., which owns Investors Group and Mackenzie Financial, was $186-million in the red.

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That's not a really big surprise, mutuals having been performing pretty poorly and many of the banks are still writing off their debts in relation to the mortgage crisis south of the boarder.

I don't think we'll see a recovery until at least next summer if even that early.