Mutual fund sales fall sharply in February from last year’s market frenzy

Historically, February is the strongest month of the year for sales, as investors scramble to contribute to their Registered Retirement Savings Plan (RRSP) before the February 28 deadline.Cole Burston/The Canadian Press

The pandemic investing boom appears to be coming to an end, with mutual fund sales falling more than 47% for the month of February, compared to a year earlier.

Canadians invested more than $9.8 billion in net mutual fund sales for the month of February – the third-highest February on record, but a significant drop from record sales of 17, $6 billion from last year for the same period, according to the latest data from the Investment Funds Institute of Canada.

Net sales are the total amount of money a company brings in, taking into account all redemptions made by investors to take money out of their investment funds.

Historically, February is the strongest month of the year for sales, as investors scramble to contribute to their Registered Retirement Savings Plan (RRSP) before the February 28 deadline.

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In 2021, RRSP season flourished as mutual fund net sales jumped to $41.9 billion in the first three months of the year, topping the best-selling year on record, which was established in 1997 with $22.7 billion in net sales for the same period. .

But now that momentum seems to be running out of steam.

The first two months of the year were off to a slower start, generating net sales of just $17.1 billion, compared to $29.2 billion at the start of 2021.

IGM Financial, AGF Investments Inc. and CI Financial Corp. all improved their annual sales last year as the pandemic shutdowns prompted Canadians to cut back on household spending.

Now, due to market volatility, IGM’s and AGF’s total assets under management for mutual funds are down 1.3% and 1.4%, respectively, while CI Financial is expected to experiencing a 1.6% decline for the month, according to a Bank of Nova Scotia research report.

Yet even with the pandemic boom slowing, some asset managers are still optimistic for a strong year ahead.

AGF, which reported quarterly results earlier this week, reported mutual fund net sales of $330 million for the first quarter (which includes December 2021 sales), down slightly from $385 million. dollars in the first quarter of the previous year. The asset manager reported six consecutive quarters of positive sales for almost 18 months and expects March to continue the trend.

Although the company does not release monthly sales figures, AGF President and Head of Global Distribution Judy Goldring told analysts on a quarterly call that so far “for the month of March, the company is close to around $100 million in sales.

“I think we can say with confidence that we came out of RRSP season in a pretty solid position,” Ms. Goldring said.

Mackenzie Investments reported net sales of investment funds – which include both mutual funds and ETFs – of $429 million for the month of February – down from net sales of $788 million. dollars for the same period a year earlier. However, the company said in a statement that its net retail mutual fund sales of $312 million were the second highest February sales in company history.

CI Financial chief executive Kurt MacAlpine declined to comment when an analyst asked on a quarterly call if the company had sales figures for February, saying the company only wanted to report on a “quarterly” basis.

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Dolores W. Simon