Balanced funds remain a mainstay of Canadian investors, while U.S. investors have started to move back into equity funds, according to a new review from the Investment Funds Institute of Canada, released today.
“Balanced funds represented almost half of all sales of mutual funds in Canada in 2003 and 2004,” said Erwin Go, IFIC’s manager of statistics. “At the same time, U.S. investors were heading back into equity funds. The difference between investors in the two countries is probably indicative of the more conservative nature of Canadians,” said Go.
The review includes statistics from 1995 to the end of 2004. The latest figures released by IFIC indicate Canadians continue to purchase balanced funds this year, with year-to-date assets of $113.7 billion, up from $81.8 billion the same time last year.
In addition, the review shows:
- The U.S. industry continues to have a much greater proportion of its assets in short-term money market funds than Canadians, while Canadians, with an eye to longer-term retirement-type savings, have a greater proportion of their assets in long-term funds;
- Annual growth in assets in the Canadian mutual fund industry have surpassed that of the U.S., especially in 2004 — the result of a hot resource market and a strong Canadian dollar; and
- Redemption rates are consistently lower in Canada than in the U.S.
The IFIC review indicates that the U.S. still holds a major share of the world’s mutual fund market, but this has been slipping since 1998, down to 50.5% at the end of 2004 from 64.2%. While a much smaller player, Canada’s market share of the world market increased last year for the second year in a row. Canada now holds a 2.58% stake, the highest Canada’s market share has been since 1997.
The U.S. data in the review was supplied by the Investment Company Institute, the national association of the U.S. mutual fund industry.