Investors looking for signs markets will turn around
Canadian investors put about $221 million into mutual funds in January, giving the investment industry a feeble start to the registered retirement savings plan season, according to preliminary figures.
That’s a far cry from January 2007, when fund sales reached about $4 billion, the Investment Funds Institute of Canada said.
Last month’s stock market roller-coaster ride also put a dent in the total assets under management by Canadian fund companies.
The institute estimated investors put $4.5 billion into money-market mutual funds in January. But redemptions in long-term equity funds were more than $4 billion.
The institute predicted fund sales will range from net redemptions of $28 million to positive sales of $472 million.
The figures are based on preliminary estimates from a sample of institute members.
Investors typically flock to money market funds as a short-term place to park money when the stock market seems uncertain. January marks the beginning of the RRSP season, when many a Canadian socks away extra savings in hopes of getting a big tax refund.
“There is a clear indication that investors are waiting on the sidelines, looking for some positive signs that capital markets will turn around before they place new investments into long-term funds,” institute spokesperson Pat Dunwoody said in a release.
His group also estimated net assets of the mutual fund industry at the end of January will be between $668.5 billion and $673.5 billion, down about 3.6 per cent from December’s $697.3 billion.
Just about all foreign and domestic equity fund categories suffered big losses last month, according to preliminary performance data released separately by Morningstar Canada.
Science and technology equity funds were the hardest hit, with the Morningstar index registering this category as down 10.7 per cent in January.
“Most tech names have been struggling to stay ahead of consumer spending and behaviour during the economic slowdown,” Bhavna Hinduja, a fund analyst with Morningstar Canada, said in a report.
Technology heavyweights such as Apple, eBay and Research In Motion fell 30 per cent, 19 per cent and 17 per cent respectively, Hinduja said.
Only six of the 42 Morningstar Canada fund indexes had positive returns for the month. The precious metals equity index had the biggest gain — 6.1 per cent — on rising gold prices.