Mutual fund redemptions totalled a record $8.4 billion in the month of October, and industry assets under management fell nearly 10%, according to the Investment Funds Institute of Canada.

The redemptions, which are up from $4.5 billion in September, comprise the largest monthly outflow based on records that begin in 1995, according to UBS Investment Research.

Long-term fund net redemptions were $6.5 billion this month, up from $2 billion in net redemptions in September and a reversal of the $1.2 billion in net sales at this point last year.

All broad asset classes were in net redemption territory in October. Equity funds and balanced funds were the largest contributors, with net redemptions of $2.7 billion a piece.

Furthermore, fund-of-funds had net redemptions of $1 billion, up from $90.3 million in September, and money market funds saw an outflow of $1.9 billion in October — just the fifth month of net outflows in the past 29 months. Money market net redemptions were down from $2.5 billion in September.

The spike in redemptions since late August is not surprising given the global equity market volatility of recent months, according to IFIC. It also attributed the redemptions to the appreciation of the U.S. dollar and redemptions tied to institutional factors such as principal protected notes that experienced protection events.

The Canadian-U.S. exchange rate particularly impacted U.S. money market funds, with redemptions of almost $526 million in September and more than $1.5 billion in October — more than 30% of their assets.

Year-to-date net sales were $2.2 billion, compared to $30.2 billion at this point last year. Over the past 12 months, total net industry sales were $6.9 billion — weaker than sales in each of the previous four years.

Negative long-term fund sales in the past 12 months were offset by positive sales of money market funds, which totaled $16.3 billion.

Industry assets under management fell 9.8% from September to end October at $571.3 billion. Total industry assets are down 18.1% from the beginning of the year and 19.5% from last year.

IE