Mutual funds suffered almost $700 million in net redemptions in April, as money market redemptions outpaced continued long-term fund sales.

According to the latest from the Investment Funds Institute of Canada, overall mutual fund net sales were in the red in April, with $669.9 million in net redemptions for the month. That still leaves total net sales at $4.75 billion over the first four months of 2010, compared to $3.74 billion at the same point last year.

In April, the industry saw $1.26 billion in long-term fund sales and $1.93 billion in money market redemptions. Long-term fund sales were down from the previous month (which included some RRSP season sales), but were up from April 2009.

Balanced funds led the way in April with net sales of $2.3 billion. However, fixed income funds fell into net redemptions ($554.9 million worth), and equity funds also had net redemptions ($473.3 million, essentially unchanged from both the previous month, and from April 2009).

Dynamic Funds led the overall net sales with $248.4 million worth, as a number of the industry’s big firms saw their long-term sales overwhelmed by money market redemptions. Indeed Dynamic and Scotia Asset Management were the only two of the 10 largest firms to record positive net sales for the month. Many smaller firms also recorded positive monthly net sales.

RBC led the long-term sales, with almost $500 million, followed by Dynamic and Scotia.

“The uncertainty we saw at the end of April regarding the prospects for debt repayment of certain European countries and the sustainability of the economic recovery led to volatility in equity markets and slower growth in assets under management,” said Pat Dunwoody, vice president of member services and communications with IFIC.

“As has been the case since October 2009, investors continued to focus their attention on more diversified fund offerings last month with balanced fund sales once again the primary driver of long-term fund sales. The impact of rising interest rates and investor expectations of future rate increases led fixed income funds into net redemption territory in April however,” she added.

IFIC also reported that assets totaled $620.4 billion at the end of April, up by $2.47 billion (0.4%) from March, and up by $25.2 billion (4.2%) from the start of the year and $102.8 billion (19.9%) from April 2009.

IE