Facts, Facts and More Facts: February 2012 Mutual Fund Industry Update

Assets in mutual funds and exchange-traded funds (ETFs) reached $850 billion at the end of February, a $19.3 billion increase from the previous month. The increase was largely driven by equity market gains. After a sluggish start to the RRSP season, sales activity picked up. February’s tally of net flows into long-term funds was $6.2 billion, ahead of January’s result but roughly half a billion dollars short of last year’s February. This year’s February intake ranks as ninth highest in absolute terms but seventeenth highest in relative terms in our Insight database (whose monthly records go back to December 1990).

Fixed income funds were the largest recipient of inflows, attracting $5.1 billion during the month. This was far and away the best February in our history for fixed income funds in absolute terms. The second and third best Februaries brought in $2.5 and $2.4 billion and occurred in 2010 an 1994, respectively. Over the past three years fixed income funds have brought in 202% of the industry’s total net flows figure.

There were nascent signs of a thawdown in equity fund flows, as the figure returned to positive territory for the first time since last May. Balanced funds, whose flow figures were also positive, have had oscillating success over the same period as four of the last nine months have logged negative flow numbers.

In a continuation of well-established trend, preassembled advice solutions, such as mutual fund of funds (MFoFs), maintained a commanding share of inflows ($4 billion or 65% of long-term fund flows).

The ETF asset base continued its unabated rise to prominence, with a $2.8 billion increase in February. The Canadian-listed ETF book of business is closing in on the $50 billion mark ($47.9 billion at end of February). While this number pales in comparison with the massive mutual fund industry asset base, ETFs continue to become a more prominent chunk of the mutual funds industry accounting for 5.6% of assets, a share increase of 2.4% over the past three years. For more details see our upcoming March 2012 issue of Insight  http://investoreconomics.com/issue/insight-advisory-service. Posted by Alexander Baker Alexander@iei.ca.