Mutual fund net sales totalled $23.4 billion in 2005, up almost 60% from the previous year, according to the latest data from the Investment Funds Institute of Canada.

The total was the highest for the industry since 2001.

It was driven by strong sales in long-term categories, particularly the balanced ($12.1 billion), dividend ($10.2 billion), and bond ($8.1 billion) categories.

All of the pure equity categories were in net redemptions for the year, with more than $3 billion redeemed from the foreign equity funds and almost $2.5 billion coming out of Canadian equity funds.

Joanne De Laurentiis, IFIC’s new president & CEO, commented, “Long-term funds sales were the highest they have been since 1998, indicating a strong sense of investor commitment to mutual funds.”

In December, balanced funds continued to lead the way, with just under $900 million in net sales. Bond funds ranked second at $613.6 million, followed closely by dividend funds. Again in December, all three pure equity categories remained in net redemptions. Overall, net sales reached just $1.7 billion in the month, but reinvested distributions added $7.9 billion.

Total assets under management in December increased 2.5% from November to $570 billion. Indeed, fund industry assets grew impressively throughout 2005, buoyed by both robust financial markets and the increase in sales. Assets in Canadian mutual funds rose to $570 billion in 2005 from $497.3 billion in 2004. Long-term fund assets grew by $76.7 billion (17.2%) from 2004. The increases in assets and sales came during a year when the S&P/TSX composite index rose 21.9%.

Among the big firms, in December, larger than average asset gains were evident at Franklin Templeton, BMO Investments, PH&N and Dynamic. Standard Life, Acuity, Saxon and Mawer also outperformed among smaller firms.

For all of 2005, RBC Asset Management enjoyed a strong 24.2% gain in assets, as did BMO Investments, with a 27.5% gain. TD Asset Management, CI Investments, PH&N and Dynamic also had strong years, among the larger firms. Some of the smaller firms saw even bigger gains, Manulife Investments’ assets rose almost 60% in the year, as did Standard Life’s. Acuity saw assets increase 97.9%.

On the downside, AIC saw its assets decline almost 20% in 2005, and AGF’s assets slid 2% for the year.

The report from IFIC also notes that: 10 months in 2005 had sales of more than $1 billion, with $9.4 billion coming in just the first three months (RRSP season); sales were strong in Canadian income trust funds and Canadian dividend funds, which had three-year returns of 24% and 17%, respectively; despite the elimination of the 30% foreign property rule sales were dominated by Canadian funds.