Date Posted: Nov 27, 2007

Insight November 2007 Monthly Update

November’s research feature continues our annual tradition of taking an in-depth look at the sales and retention patterns of the funds industry, and “opening the envelopes”—revealing this year’s leaders in the various sales and retention categories. (The Trend Lines article reprises the analysis for segregated funds.) This year’s Honour Roll tables have been expanded to highlight the growing importance of the fund wraps segment and the resurgence of the foreign diversification theme. There is much to rejoice about in the run-up to the 2008 RRSP season, but industry optimism appears to be of a cautious variety. Relative redemptions have stabilized, but absolute volumes are nearing $90 billion (an all-time high), confirming that an intense takeaway game is in full swing. Sales are on the rise but remain highly concentrated among the top-selling manufacturers, with one-third of reporting fund complexes ending up in net redemption territory for the 12-month period to the end of October 2007. Meanwhile, the strong sales momentum was achieved against the backdrop of several years of significant market gains, which raises the question of its sustainability in a market downturn. Last August, as the ABCP crisis shook equity markets around the world, the industry tasted the bitterness of aggregate net redemptions in long-term funds for the first time in 39 months. More than ever, the familiar cautionary disclaimer would seem to apply: “Past performance is no guarantee of future returns.”
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