Mutual funds generated some solid sales in April as investors crept back into the markets, more importantly, assets jumped more than 4% in the month.

According to the latest data from the Investment Funds Institute of Canada, long-term mutual fund sales were $646.4 million in April, up from net redemptions of $412.8 million in March and $29.4 million in net redemptions in April 2008. The last time that long-term fund sales were over the $600 million mark was in the heart of last year’s RRSP season, February 2008.

While the resurgence in net sales is surely welcome, it pales in comparison to the market gain funds enjoyed during the month. Long-term fund assets increased by $20.7 billion, or 4.9%, during the month; and overall assets were up 4.1%. The gain in long-term fund assets was due almost entirely to market effect, IFIC said.

“The final data confirms what we saw in our initial forecast, investors are moving back into long-term funds both through new fund sales and through portfolio rebalancing,” said Pat Dunwoody, IFIC’s vice president, member services and communications. “Long-term fund assets under management increased substantially as well, after growing 4.8% in March, long-term fund assets increased by another 4.9% in April — a $40.3 billion increase over the last two months.”

Money market funds had $26 million in net redemptions for April, leaving overall net sales at just over $370 million. IFIC suggests that the stronger sales in the long-term fund asset classes coupled with net redemptions from money market funds, “likely signals that Canadian investors have begun to move off the sidelines either because they perceive that markets have passed bottom and are starting to strengthen or because the effects of falling interest rates on the returns of more conservative investments have led them to search out higher yielding investments.”

On a sector basis, the Canadian short-term fixed income category had the highest net sales in April at $401.6 million, followed by the high yield fixed income fund category at $315.3 million, and the Canadian neutral balanced category at $132.3 million.

The improved market performance and resulting asset gain pushed assets under management to $517.7 billion from $497.4 billion the previous month. Long-term fund assets rose to $443.2 billion from $422.5 billion at the end of March.

By company, RBC dominated the sales charts, accounting for $818 million in overall net sales, although $665 million of this came in its money market funds. Its long-term funds produced just $152.5 million in monthly net sales.

Scotia Securities led the long-term sales at $180 million, followed by RBC, and Dynamic Funds at $145 million. TD Asset Management and Fidelity Investments Canada ULC were the only other firms with more than $100 million in long-term net sales during the month.

IE