Mutual funds saw over $800 million in net redemptions in June as investors shifted from money market funds to long-term funds, the Investment Funds Institute of Canada said Wednesday.

Total net redemptions were $834.7 million in June, down from net sales of $939.2 million in May.

For the first six months of the year, net sales totaled $3.8 billion, down notably from $12.8 billion at this point last year.

However, the sales picture is much better among long-term funds. Long-term sales were $1.97 billion in June — the highest result for the month of June since 1997, IFIC said.

“The bulk of these inflows were due to rebalancing activity – investors moving off the sidelines, out of money market funds and into the long-term fund categories,” it explained.

Moreover, long-term fund sales in the first half of 2009 were $4.2 billion, compared with net redemptions of $713.3 million for the same period last year.

While long-term sales were quite strong in June, money market funds had net redemptions of $2.8 billion in the month. Much of this may have been plowed into long-term funds, but alternative investments obviously also captured some of the outflow.

For the first half, money market funds are in net redemptions, with $360.2 million worth, compared with $13.5 billion in net sales for the same period last year.

Within the long-term fund asset classes, domestic balanced funds led the way with $935.2 million in net sales, IFIC said. This was followed by global & high yield fixed income funds at $580.7 million, and domestic fixed income funds at $475.1 million. The global & international equity fund asset class had the highest net redemptions among the long-term fund asset classes at $415.5 million, IFIC noted.

“Although institutional inflows were a factor last month, we continued to see retail investors moving off the sidelines, rebalancing out of money market funds and back into the balanced and bond fund categories,” observed Pat Dunwoody, vice president of member services and communications with IFIC.

“In addition, we were seeing those investors, both institutional and retail, who moved into money market funds in 2007 and 2008 when yields were relatively high, moving out of money market funds and into other interest-bearing instruments as yields have fallen.”

Scotia Securities led the net sales parade in June, with $281.7 million worth; followed by Sentry Select Capital Corp. and Dynamic Mutual Funds. On the long-term side, RBC led the way in June with $385.9 million in net sales. TD Asset Management ranked second, followed by Dynamic.

Industry assets under management continued to increase in June, IFIC said, ending the month at $547.1 billion, up $9.3 billion (1.7%) from May and $40 billion (7.9%) from the start of 2009.

IE