World Economic

Canadian investors made a major reversal of direction last month, buying into long-term mutual funds as financial markets rallied, although cash-outs from money market funds pulled down the overall April sales figure.

The industry’s sales for the month totalled $370.3 million net of redemptions and reinvested distributions, the Investment Funds Institute of Canada reported yesterday. This was down from $519.7 million in March and $457.5 million in April of last year.

However, there was a strong shift toward long-term fixed-income, equity and balanced funds. They totalled $646.4 million in April sales, reversing net redemptions of $412.8 million in March and $29.4 million in April 2008.

Meanwhile, the industry group reported money market funds had $276.1 million in net redemptions, a $1.2 billion swing from March net sales of $932.5 million paydayloans.

The shift away from money market funds, currently paying negligible returns but regarded as safe short-term parking places for cash, resulted in April net sales of $834.4 million in bond funds and $378.3 million for balanced funds that combine stocks and fixed-income holdings.

Net redemptions continued from pure equity funds, but slowed as the S&P/TSX composite index gained 6.9 per cent in April on top of its 7.4 per cent rise in March, while New York’s Dow Jones industrial average put together consecutive monthly gains of more than 7 per cent. Net redemptions from equity funds were $442.6 million in April, abating from $685.6 million in March and $902.5 million in April 2008.

The Canadian Press

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