Fund sales soar ahead of RRSP deadline

Mutual fund inflows surged in February, as last minute RRSP contributions drove net sales to $5.87 billion for the month. That’s up from $3.05 billion in January and $3.39 billion in February 2010.

In the first two months of 2011 alone, net sales have totaled $8.92 billion, nearly double last year’s total of $4.46 billion. Total mutual fund assets were $658.4 billion at the end of February 2011, up $16.6 billion from January and $89.6 billion since last February.

Sales aren’t the only change in investor behaviour, though, as Canadians opted for more risk than last year.

“In comparison to last RRSP season, where investors were predominantly conservative in their investment choices, this RRSP season saw investors increase their exposure to Equity funds, which led to net sales triple that of last year,” said Jon Cockerline, director, policy and research, IFIC.

Total net sales of equity funds were $1.53 billion, more than five times that of January ($305.4 million) and last February ($302 million). Domestic equity funds dominated sales, with net inflows of $943 million, compared to $378 million for U.S. equity funds and net redemptions of $55.4 million for global and international offerings.

Balanced funds remained the most popular option, however, with net sales of $5.45 billion, up from $3.42 billion in January and $3.81 billion in February 2010. Within the balanced fund space, domestic funds took in $2.53 billion, while global funds took in $2.92 billion.

Fixed income funds slipped into net redemptions, with out-flows totaling $189 million. By comparison, January saw net sales of $215.8 million, while February 2010 saw sales of $1.30 billion. Domestic fixed income funds sold off to the tune of $648 million, while investors placed a net $459 million in global and high yield fixed income funds.

Standalone funds made a bit of a comeback, accounting for 2.42 billion in net sales, compared to just $1.04 billion in January and $825 million in February last year.

Fund-of-fund sales rose as well, to $3.45 billion, up from $2.01 billion in January and $2.56 billion in February 2010.

“There was also a significant increase in stand-alone fund sales, mostly driven by a reduction in money market fund net redemptions in comparison to previous years, showing that investors have definitely come off the sidelines and are taking more of a long-term approach to their investment portfolios.”

Money market fund net redemptions totaled $949.7 million, up from $916 million in January, but were less than half of the $1.99 billion in redemptions posted in February 2010.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.