With stock markets hitting record highs it is no surprise the latest stats on fund sales finds Canadian investors feeling optimistic.
The Investment Funds Institute of Canada (IFIC) released May numbers on fund sales on Tuesday. The stats highlight what advisors have already likely noticed--investors are moving assets out of money market funds and back into equities.
Tamar Modzmanashvili, an IFIC employee, in an interview with Wealth Professional, said total assets under administration (AUM) expanded smartly in May. Total AUM for the mutual funds industry reached $1.08 trillion in May 2014. Year-to-date AUM increased by $82.9 billion, or 8.3%.
Breaking down those numbers, net sales for the mutual funds industry totalled $5.01 billion. This is an increase from last month when net sales were just $4.57 billion, represents a solid increase over net sales of $3.81 billion in the same month last year, "the month was good," says Modzmanashvili. "Outside of RRSP season net fund inflows are between three and five billion. So this is good."
Investors moved assets out of money market funds and into equities. Net redemptions on money market funds were $334.5 million; year-to-date net redemptions were $1.7 billion. Equity funds' net sales in May 2014 totalled $335.1 million. This is compared to net sales of $78.3 million last month and net redemptions in the same month last year. "I am not surprised. Since the market picked up the numbers have gradually been increasing," says Modzmanashvili. "Interest rates on money market funds are low. But it is also that investor confidence is higher."
Also telling, long-term fund sales were up. This suggests investors are counting on a secular recovery period. Short-term focussed funds realized a net-redemption of $334 million. "People are going into long-term funds. There was quite big increase there. It's a positive time,” says Modzmanashvili.