Long-term mutual fund assets ended July $811 billion, up $5.6 billion from the previous month. The gain reflected a combination of strong sales and higher asset valuations for fixed income funds. Fixed income funds alone brought in $2.9 billion in net flows. However, overall net flows for the month stood at $2.2 billion as equity funds posted significant net redemptions while the remaining major long-term asset category, balanced funds, brought in $144 million. In the year-to-date 2012, fixed income funds have been responsible for $18.9 of the $19.5 billion in inflows generated by long-term funds.
Among income-oriented offerings, the spotlight was firmly on bond funds with all four bond categories ranking among the five best-selling asset classes during the month. Long-term Canadian bond funds fared the best, bringing in $1.8 billion in inflows as the DEX Long Term Bond Index rebounded returning 1.5% in July compared to -0.4% in June. In the year-to-date, the category has already attracted $10.3 billion in inflows or just over half of long-term fund net flows.
Overall, only half of the 32 detailed mutual fund asset classes tracked by Investor Economics ended the month in positive net flow territory. Those Canadian and international equity funds not focused on generating income populated the ranks of asset classes ending the month in net redemptions.
The amount of money being pulled out of the core Canadian equity funds has increased this year. During the first seven months of 2012, the category has amassed net redemptions of $5.2 billion compared to $2.5 billion during the same period last year. Multi-cap Canadian equity funds have been hit the hardest, accounting for 90% of category’s net redemptions in the year-to-date. By contrast, the sales momentum has returned to large-cap funds which went from $432 million in net redemptions at this time last year to posting positive inflows of just over $300 million in 2012.
Since the 2008 market downturn, sales of long-term stand-alone funds have generally remained tepid, particularly outside of the RRSP season. However in July, stand-alone funds not only managed to bring in positive inflows but also outpaced sales in mutual funds of funds (MFoFs). Stand-alone funds attracted $1.2 billion in long-term inflows. Meanwhile, roughly $1.0 billion of the $1.7 billion brought in by MFoFs was invested into long-term mutual funds. In the year-to-date, MFoFs continue to lead the sales race by a considerable margin, having generated $12.3 billion in long-term mutual fund flows compared to $7.1 billion for stand-alone funds.
In July exchange-traded fund (ETF) assets crossed the $50 billion landmark, despite net redemptions totaling $144 million. Equity ETFs were the main culprit, amassing $733 million in net redemptions, their worst-selling month in over a year. Meanwhile, fixed income funds continued to benefit from the overall climate of market uncertainty and posted net creations of $561 million. For more details see the upcoming July2012 issue of Insight Advisory Service http://investoreconomics.com/issue/insight-advisory-service. Posted by Sandeep Gosal Sandeep@iei.ca.