Mutual funds recorded about $800 million of net redemptions in December as money flowed out of long-term funds, money market funds were the sole source of net sales.

The Investment Funds Institute of Canada reports that long-term redemptions totaled $2.6 billion in December, up from $2.4 billion in November. Money market funds had net sales of $1.8 billion in December, up from $1.4 billion in the previous month.

Balanced fund net redemptions were $765 million in December, down from over $1 billion the prior month. But redemptions increased in the equity, bond and specialty fund categories. Net redemptions of equity funds were just over $1 billion, up from $901.8 million in November. Net redemptions of bond funds were $743.2 million, up from $390.7 million in the previous month.

Despite the overall net redemptions, industry assets under management at the end of December were up a tiny bit to $507 billion, rising 0.3% ($1.7 billion) from November.

IFIC also noted that Canadian equity funds had the second highest net sales in December at $335.8 million, up from the previous month and higher than at this point last year as some investors began to move back into equity markets.

The organization also notes that evidence of investor movement back into equity markets came through net switches data in December. International equity fund net switches were just under $90 million this month, up from -$33.2 million in November. U.S. equity fund net switches were $32.1 million in December up from -$5.4 million in November.

“We saw some positive signs in December”, said Pat Dunwoody, IFIC’s vice president, member services and communications. “Industry assets under management grew by $1.7 billion, overall redemptions were down from November and we saw an increase in fund sales to several long-term fund categories such as Canadian Equity funds and Global Equity Balanced funds. Clearly, some investors are moving back into the market”.

http://statistics.ific.ca/English/reports/2008/12/public/IFIC_Statistical_Commentary.pdf