The Investment Funds Institute of Canada says 2004 was the best year for net fund sales since 2001.

Industry assets grew $58.4 billion in 2004 to $497.3 billion. About $14.7 billion of that increase was due to net sales increases, IFIC said. The rest was due to rising stock market valuations, which boosted the asset base of funds by almost $44 billion.

“These are the best annual sales figures we’ve had since 2001,” said Tom Hockin, president and CEO of IFIC, in a release. “They support the enduring confidence Canadian investors have in mutual funds as we enter the RRSP season, and bode well for the ongoing growth of the industry in general.”

IFIC said long-term funds (which exclude money market funds) powered most of the asset growth in 2004. Net sales of long-term funds were also the highest since 2000, at $16.6 billion. Solid sales increases occurred in dividend and income funds (up $8.1 billion), balanced funds (up $5.8 billion)

The S&P/TSX composite index gained 12.5% last year. The Dow Jones industrial average rose 3.1%; the Nasdaq composite index added 8.5%.

Industry figures also reflect the continuing consolidation trend in the industry. Last year, Investors Group, Mackenzie Financial and Counsel Wealth Management merged into the largest fund company in Canada (IGM Financial) , with total assets under management of $82.8 billion.

The 10 largest fund companies in Canada had 78% of the industry’s assets under management in December 2004. Ten years earlier, the 10 biggest fund companies had 63% of fund industry assets.