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By Cameron French
Reuters
Monday, December 15, 2003
TORONTO, Dec 15, 2003 (Reuters) - Canadians pushed a year-high C$513 million into mutual funds in November, a report said on Monday, as surging equity markets drove the recovery.
Net sales were C$513 million ($390 million) for the month, according to the Investment Funds Institute of Canada, whose members control most the country's mutual funds.
Adrian Mastracci, investment counsel and
president of Vancouver based ‘fee-only’ KCM Wealth Management, says, “Investors are somewhat fearful.
If some things have to be changed, then I think we should take the medicine and change it.”
Gross sales of all funds were C$8.4 billion, compared with net redemptions of C$7.9 billion, producing the second-straight month of strong fund inflows. The net sales figures did not include reinvested distributions of C$247 million.
"Long-term fund sales were C$793 million for November and continue to propel the recent string of positive sales the industry has been experiencing," Tom Hockin, IFIC's chief executive, said in a release.
Money market funds showed a loss of C$280 million.
The fund industry has taken heavy losses from the three-year decline in stock markets, with net redemptions hitting a 10-year-high of C$1.6 billion in April.
But net sales have been positive in four of the past five months as North American stock markets rallied. Since mid-March, the Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) has risen 27 percent.
Total assets under management by IFIC members were C$423.6 billion in November, up 0.8 percent from October, and 6.6 higher than last November.
The strong performance comes amid a high-profile U.S.-spearheaded probe into mutual fund trading practices.
The probe, led in the United States by New York Attorney General Eliot Spitzer and the Securities and Exchange Commission, has focused on rapid trading to take advantage of changing prices, and illegal late trading.
Canadian regulators have asked domestic companies what procedures they have in place to deal with the practices, although much of Canadian mutual fund trading is handled electronically with time stamps, which observers have said makes such abuses difficult.
One analysts said that while Canadian fund managers might have to end up altering trading practices, the relatively small size of Canadian funds made such abuses less likely.
"Investors are somewhat fearful," said Adrian Mastracci, president of KCM Wealth Management Inc.
"If some things have to be changed, then I think we should take the medicine and change it."
The Ontario Securities Commission, which sent out the Canadian questionnaires, said it expects to start hearing back from fund companies this week.
($1=$1.31 Canadian)
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