Mutual fund sales during RRSP season were down significantly from a year ago, although long-term sales actually revived a bit in February, according to the latest data from the Investment Funds Institute of Canada.

IFIC reports that mutual fund net sales reached $1.7 billion in February, and a total of $2.8 billion for the first two months of 2009. This is down from $5.7 billion and $6.6 billion, respectively, for the same months last year. RRSP season closed on March 2 this year, so the February numbers don’t capture the last couple of days of the sales season.

Money market fund sales were $1.4 billion in February and long-term funds contributed sales of $258.9 million, IFIC said. This was the first time that long-term sales were positive since June 2008. However, last February, long-term funds managed $2.6 billion in positive net sales.

IFIC said that much of the long-term sales strength in February came from bond funds, which attracted $870.4 million in net sales, compared with $319.3 million in the previous month and $55.5 million in the same month last year.

The big drop from last February came on the balanced side, as sales slipped from $2.1 billion last year to just $131 million this year.

Equity fund net redemptions picked up in February. Net redemptions totalled $683 million, compared with $376.2 million in net redemptions in January, and $279 million in net sales a year ago.

“Investors were a little less conservative in their investment choices in February. Aside from the strength in money market fund sales we have seen for some time now, Canadians invested $870 million in bond funds and $131 million in balanced funds in February”, observed Pat Dunwoody, IFIC’s vp, member services and communications.

“There is definitely a segment of the market that has re-discovered the bond fund and the benefits of this type of diversification on the overall volatility of a portfolio.”

However, any trend analysis must be tempered by the observation that one firm — RBC — accounted for the vast majority of the sales all by itself. RBC generated $78.4 million in long-term sales and $1.33 billion in money market sales, contributing $1.4 billion of the total net sales in February.

While RBC dominated the overall net sales and the money market sales, it was not the leading long-term fund firm. IGM Financial led the way on the long-term side with $125.4 million in monthly net sales. RBC missed out on the long-term sales crown due to $82 million in net redemptions from its Phillips Hager & North Ltd. funds; its RBC Asset Management unit had $160.5 million in long-term net sales.

Apart from IGM, CIBC Asset Management was the only other firm with more than $100 million in long-term net sales; although the Dynamic Funds, Fidelity Investments Canada ULC and HSBC Investments (Canada) Ltd. weren’t far behind.

Fund-of-fund sales also revived in February reaching $410.6 million, up from $144.6 million last month, although they were still down from last year’s $1.8 billion.

IFIC also reported that industry assets were $476.9 billion at the end of February, down 2.9% from the previous month, and down 23.1% from the previous year.

IE