Mutual fund net sales for October reached $1 billion, according to the latest figures released today by the Investment Funds Institute of Canada. However, industry assets dropped sharply last month as equity markets tanked.

“The net sales for October helped increase the industry’s year-to-date sales to $19.4 billion, the highest for that time period since October 2001,” said Tom Hockin, IFIC’s president and CEO, in a release. The net sales total excludes re-invested distributions of $506.0 million.

Mutual funds suffered from the uncertainty surrounding the future tax rules for income trusts, Hockin noted. “It appears investors may be concerned about the future of tax treatments of income trusts, as there were net redemptions of about $190 million in October in income trust mutual funds, compared to the recent average of $200 million in monthly net sales.”

Balanced funds were the biggest sellers in October, with net sales of $741 million excluding reinvested distributions. Bond and income funds recorded $551 million in net sales, and dividend income funds generated $264 million in net sales.

However, redemptions continued to flow from the pure equity funds. Canadian equities were hit hardest, recording $394 million in redemptions, followed by $218 million from foreign equity funds and $101.6 million out of U.S. equity funds.

In the year to date, almost $3 billion has come out of foreign funds and nearly $2 billion has been redeemed from Canadian equities. U.S. equities have suffered about $918 million in net redemptions.

On the bright side, balanced funds have recorded more than $10.1 billion in net sales, dividend funds are second with almost $8.9 billion in net sales, and Canadian bond funds are third with almost $6.7 billion in net sales.

Total assets under management in October also decreased 2.8% from September to $539.0 billion.

As a result of the overall asset decline, every single firm in the top 30 recorded a drop in assets, with the exception of HSBC Investments (Canada) Ltd., which was flat for the month.

Lower than average drops were evident at RBC Asset Management, TD Asset Management and BMO Investments, down 1.8%, 1.2% and 2.0% respectively. PH&N was only down 1.9%, Brandes slid just 1.5%, and National Bank was 1.6% lower.

Harder hit were firms that have recently benefited from the strength in income trusts. This includes firms such as Dynamic, which saw assets drop 5.4%; Guardian, where assets were down 6.4%; and, Sentry Select, which saw assets drop 11.2%. Dominion Equity Resource Fund reported that it lost 12.1%.