Investor Economics

Mutual funds (including exchange-traded funds) ended April 2012 with $851 billion in assets, a decrease of $2.9 billion, or 0.3%, from the previous month due entirely to negative market effect. Net flows into long-term funds were positive, at $2.3 billion, however, April had the lowest monthly result year-to-date. Fixed income funds were the largest recipient of inflows, attracting $1.1 billion during the month. Balanced funds finished with positive net flows of $697 million while equity funds returned to the black, posting their best sales month of the year netting $473 million. The positive result of equity funds was driven by equity income and U.S. equity funds, which accounted for 135% of equity flows. International equity funds eked out a positive result, while core Canadian equity funds remained in net redemmption territory to the tune of $229 million.

From a product structure perspective, mutual funds of funds (MFoFs) generated $1.8 billion in net flows. Meanwhile, the ETF segment wrapped up April with $882 million in net creations, but just a $97 million increase in assets. The ETF asset base now sits at $49.1 billion. For more details see the upcoming May 2012 issue of Insight Advisory Service http://investoreconomics.com/issue/insight-advisory-service. Posted byAlexander Baker Alexander@iei.ca.

In which regions are mutual funds growing the fastest? Which companies are selling the most, and how does your sales and redemption experience compare to that of other firms in each regional market?

These are some of the questions answered by the customized Mutual Fund Provincial Sales and Market Share Tracking Report, a quarterly study produced by Investor Economics that tracks asset growth and sales and redemption activity on a regional basis across the country. For more information on this report, please contact Travis Young Travis@iei.ca or Carlos Cardone Carlos@iei.ca. Posted by Carlos Cardone Carlos@iei.ca.

The online/discount brokerage (ODB) channel experienced its RRSP season boost at the end of March 2012, although not on par with seasons past. Assets increased by $15.5 billion to finish the opening quarter at $253.6 billion— marginally ahead of the previous high-water mark set one year ago. Registered assets (including TFSAs) were 3.8% ahead of last year, largely driven by RRSP contributions.

Against the backdrop of the global economic malaise and equity market retrenchment in the second half of 2011, self-directed investors favoured conservative investments. By the end of March 2012 GIC and cash holdings had expanded by 10% relative to their level one year before, while equities contracted by 2%. ETFs—particularly those of the fixed income variety—led growth among investment vehicles, posting a 6% expansion over the same period.

Conservative behaviour was also reflected in the divergent activity experience between the last year’s RRSP season and this year’s. In the quarter ended March 2011 transaction volumes and revenues peaked at 15 million trades and $460 million, respectively—levels that have been unmatched since—and gross new accounts crossed the 200,000 threshold. At the end of the first quarter 2012, all indicators were at least 12% below last year’s highs, although they were still well ahead of the last quarter of 2011.

Although there is some evidence that investor fatigue played a role in the reduced activity levels, we believe that a broader theme may be at play. The incipient signs of a shift towards greater balance in the ODB asset mix—traditionally heavily skewed towards equities—are likely a reflection of the changing “identity” of the channel’s clientele. As discussed in our special feature on the channel (please see “Online/discount brokerage: Guided by the evolution of self-reliance” http://investoreconomics.com/issue/retail-brokerage-fall-2011-quarterly-report), in recent years the channel’s target clientele has grown beyond its traditional dominance by the high-frequency traders to include more self-reliant, accumulation-phase, investors. For more information and up-to-date statistics on retail brokerage channels, please refer to the upcoming edition of our Retail Brokerage and Distribution Advisory Service http://investoreconomics.com/issue/the-retail-brokerage-report. Posted by Matthew Goldstein Matthew@iei.ca.