Mutual fund net sales reached $1.8 billion in June, powered by very strong sales of balanced funds.

The Investment Funds Institute of Canada said today that June’s net sales were the highest for the traditionally slow month since 1998. Including re-invested distributions, the month’s net sales stood at $2.7 billion.

Balanced funds led the way in June, generating more than $1.1 billion in net sales, far ahead of the second place bond & income category ($583 million), and the third place dividend & income category ($508 million).

On the negative side, foreign equity funds remained in net redemptions ($318 million worth), as did US equity and Canadian equity funds, $117 million and $84.5 million, respectively.

The strong June for balanced funds pushed it into the lead for year to date net sales, with $6.2 billion; just ahead of dividend & income funds, which have $6.17 billion. Foreign equity funds have seen almost $1.9 billion in net redemptions, and both the Canadian and U.S. equity categories are in redemptions for the first half, too.

Notwithstanding the strong sales since the end of RRSP season this year, net sales in the first half still lag those of a year ago. So far this year, net sales total $12.9 billion, down from $13.3 billion in the first half of 2004. However, long-term fund net sales are ahead of last year’s pace, $13.8 billion to $13.0 billion.

IFIC also reported that total assets under management in June increased 1.3% from May to an all-time high of $526.8 billion in June. This is the eighth time in the last 10 months that assets have increased, IFIC said.

Among the top 10 companies, the strongest asset gains were enjoyed by RBC Asset Management, CI Investments and TD Asset Management; up 2.3%, 2.1% and 2.1% respectively. Dynamic Mutual Funds saw its assets jump 3.7% in the month. There were strong gains enjoyed by smaller companies such as Acuity Funds, Standard Life Mutual Funds, and Northwest Mutual Funds. Solid gains were also seen at Manulife Investments, Brandes Investment Partners, HSBC, Saxon and Mawer.

AIC saw its assets fall another 2.8% in the month. Smaller declines were evident at Fidelity and AGF.