Canada’s big banks enjoyed buoyant mutual fund sales during the recent RRSP season, according to data from the Investment Funds Institute of Canada.

The family of funds from Toronto-based RBC Funds Inc. topped the sales charts for the four-month period of November 2006 through to February with net sales of $3.4 billion, followed by TD Asset Management Inc. , also of Toronto, with $2.6 billion. Total industry net new sales reached $17.4 billion.

AGF Funds Inc. was the top seller among independent mutual fund companies, with $1.2 billion in net new money, just a little behind BMO Investments Inc. ($1.3 billion) and edging out Scotia Securities Inc. ($1.2 billion). All three firms are based in Toronto.

The data used in this article are the new “administration-distribution role” figures that IFIC now releases along with the “primary investment-management role” numbers it has always provided.

The new data include sales of multi-fund wrap programs managed by a company, as well as sales of stand-alone funds. Third-party stand-alone funds held in fund wraps are excluded from the results of the third-party supplier.

In contrast, the traditional primary investment-management role data account for sales of every fund managed by a particular company, even those held in another company’s wrap program.

CIBC Securities Inc. , also of Toronto, had the seventh-highest net sales at $904 million, behind Winnipeg-based Investors Group Inc. at $985 million.

These are all big firms with substantial mutual fund assets. Considerably smaller Desjardins Sécurité Financier and Brandes Investment Partners & Co. also made the top 10, both with more than $600 million of net new money. For Brandes, this was equivalent to 11.2% of its Feb. 28 assets.

Brandes’ net sales were spurred by its acquisition of money manager Kim Shannon, who announced she was leaving CI Financial Inc. in early October. Brandes Sionna Canadian Equity Fund, managed by Shannon, was the 27th biggest selling fund in the recent RRSP season — attracting $159 million in new money, even though it was just launched in December.

The success of Brandes Sionna Canadian Equity bucked the trend toward net redemptions in Canadian equity funds, which totalled $1.2 billion in the RRSP season for the category as a whole.

Acting on the advice of investment advisors and the mutual fund companies themselves, investors put a net $10.2 billion into global funds. More than half — $6 billion — went into equities; the rest went into balanced funds.

Brandes was a beneficiary of this. Its Global Equity Fund attracted a net $255 million, to bring its assets to $3.4 billion.

Desjardins’ success reflects another theme in this RRSP season — the increased appetite for packaged solutions, such as model portfolios, asset-allocation funds and wrap programs. All of Desjardins’ sales were in its Diapason and Chorus products, says Marc Dubuc, director of market strategy and product development.

Simon Hitzig, vice president of marketing at Toronto-based Dynamic Mutual Funds Ltd. , says his company’s Marquis series of portfolio funds generally sold well. Dynamic has made changes to subadvisors and improved both reporting and advisor compensation.

AGF’s success is testament to the new sales and marketing strategy put in place in 2004, when it realized its problems were greater than just the loss of Brandes Investment Partners LP as an outside manager in 2002. The strategy has centred on reconnecting with advisors and has clearly worked.

AGF International Value Fund, originally managed by Brandes, was still in net redemptions. AGF changed the manager to AGF International Investors Co. Ltd. in Dublin in early September.

Randy Ambrosie, president of AGF, says advisors were “very positive right from the moment the change was announced. They thought it was the right decision.”

Ambrosie also notes “very strong momentum” in his firm’s Harmony and Elements managed products.

These programs are in the “broad balanced funds” category. Besides the net $4.2 billion going into global balanced funds, there was another $4.6 billion going into Canadian balanced funds.

The strong inflows into balanced funds reflect the continuing search by investors for income. A major exception is income trust funds, for which valuations came down after the Oct. 31 announcement of a change in taxation of income trusts in four years.

Firms that specialize in income trusts saw a dampening effect on overall sales, and some were in net redemptions. Dynamic is in the former category. While Dynamic Focus + Diversified Income Trust Fund had $192 million in net redemptions, the strength of other funds still left Dynamic in the top 10.

@page_break@Dynamic has worked hard to avoid a major negative reaction to the income trust tax announcement. There were several conference calls and “advisors seem pretty steady on it,” says Hitzig.

The fastest growth in Dynamic Focus + Diversified Income Trust Fund came three years ago, Hitzig points out, so many advisors “did so well with income trusts that to give something back is not the most painful for most clients.”

Dynamic is introducing new income products, notes that guarantee distributions for 15 years — starting now, in five years or in 10 years. The idea is to give inves-tors the flexibility to choose when they want the 15 years to start.

Scotia Securities was the most successful of the bank-owned firms this past RRSP season, on a relative basis, with RRSP sales equivalent to 5.9% of Feb. 28 assets. This was the result of putting more focus on mutual funds, with more advertising and significant advisory support in the branches, says Glen Gowland, managing director for business development for wealth management at Scotiabank.

TD also launched a new sales system in its branches, provided more training and launched a number of new global products. TD Mutual Funds president Tim Pinnington says there seems to be a very benign mood among investors and a focus on retirement savings.

Guardian Group of Funds Ltd. and Acuity Funds Ltd. , both based in Toronto, were in net redemptions, thanks to income trusts. But Stephen Crawford, Acuity’s senior vice president for national sales, thinks the worst is over.

Acuity Income Trust Fund lost $62 million, bringing its assets down to $250 million. The much larger Acuity High Income Fund, which also invests in income trusts, lost $58 million but still had $1.8 billion in assets as of Feb. 28.

Acuity has increased the maximum for dividend stocks in Acuity High Income Fund, but the fund manager hasn’t changed his asset allocation as yet. Crawford says a lot of investors have asked that the fund be kept as it is.

Acuity was already focusing on global funds when the income trust tax announcement hit. It hired a new global portfolio manager and launched Acuity Global High Income Fund and Global Dividend Fund last year. Acuity is “very, very pleased” with sales of those funds, says Crawford.

GGOF believes income trusts should continue to play a role in portfolios of increasing numbers of clients who need income, says Ross Kappele, GGOF’s president. He is also confident that the income trusts in GGOF’s funds will continue to provide competitive returns even after taxation of the trusts changes in 2011.

Like Acuity, GGOF was already focusing on global funds, launching two in the past year. Kappele says GGOF is “really pleased” with their acceptance and sales.

AIC Ltd. of Burlington Ont., was also in net redemptions, to the tune of $271 million, which placed the company firmly in last place in terms of sales in the past RRSP season.

AIC did, however, have good performance numbers in 2006, with more than 60% of long-term assets in its funds in the first or second quartile among their peers, which, if continued, should stem the
outflows. IE