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Investor Economics

Insight October 2008 Monthly Update

This year’s market mayhem has seen many investors avoiding equities in favour of cash and other investment safe havens. But one large group of investors has stayed put—those that routinely and automatically contribute to investment funds in group savings plans week in and week out. These fall into three broad categories: group RRSPs; defined contribution registered pension plans (DC-RPPs); and deferred profit sharing plans (DPSPs) or employee profit sharing plans (EPSPs). These plans tend to run on autopilot—by and large oblivious to market ups and downs—with contributions mostly made by payroll deduction and automatically flowing into portfolios that remain invested according to long-established investment mandates and strategies.

The October issue of Insight provides an assessment of the fund companies’ success in penetrating this market by providing third- party portfolio management to the insurance company pools segment. We begin by comparing the recent growth and sales experience of insurance company pools and mutual funds, then report on asset mix and emerging product trends. The article concludes by looking at “who’s who” in the insurance pools arena, identifying the largest providers of investment products to the insurance platforms and profiling the platforms themselves.

The Trend Lines article notes that retention is once again the topic du jour as the funds industry moves through the bear market cycle and net outflows are beginning to materialize at the industry level. September was a month where a combination of poor markets, slowing sales, rising redemption volumes and rebalancing activity by fund wrap managers conspired to produce a net redemption result for long- term funds.

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  • Tags: DC-RPP, deferred profit sharing plans, DPSP, employee profit sharing plans, EPSP, group RRSP, investment funds, mutual funds

  • Date Posted: October 24, 2008