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| MUTUAL FUNDS MONTHLY: MAY 2009 | | | The Canadian fund industry had a fairly unremarkable April from a net sales standpoint as $370 million made its way though the doors last month. That’s off 34% versus the same month from a year ago and it is 29% lower than March 2009’s tally. What was remarkable last month, however, was the fact that net money market fund flows were negative. Outside of August and September of last year, when the very integrity of money market funds was being questioned, the category hasn’t seen a month of net outflows since mid-2007. Money market funds have really been THE sales story over the past 18 months. Looking at the money market fund situation more granularly, the big-daddy of Canadian money market funds – RBC’s Premium Money Market offering – saw another $639 million in new capital come its way in April. That figure is nearly 50% larger than the aggregate flows into the industry’s next ten best selling money market funds last month. The RBC fund’s recent inflow history skews the money market group’s sales stats so dramatically that it would almost make sense to classify the product as its own unique category. A peek at the money market funds that experienced net redemptions presents a more telling story in our view. There were nearly 20 money market products with net redemptions of at least $20 million last month. That’s uncommonly broad-based and in our opinion it appears as though investors have reached some sort of money market fund fatigue. Whether this is temporary phenomenon or the start of a trend, it is clear that most investors who began moving into money market funds at some point over the past 18 months are finally tiring of earning virtually no yield in an environment where riskier assets are beginning to thrive. We are not going out on a limb when we say that continued equity market strength should bring about further reallocations from money market assets to riskier assets and very soon we could once again see monthly equity fund flows that are in the black. And what happens with anomalous RBC’s $18 billion Premium Money Market fund is anybody’s guess. Please click on the link below to open the full multi-page report and printable version: http://research.dundeesecurities.com/Research/Funds052009.pdf
(Pertinent and general disclosures attached.) This report and others can be found on the MAST Research Website. Login to MAST and select 'Investments' from the top menu or select Research from the Client Solutions links. http://www.dundeewealth.com/action/DisplayPublicHomePage PLEASE BE ADVISED THAT TRADING INSTRUCTIONS SHOULD NOT BE COMMUNICATED VIA E-MAIL, AND IF RECEIVED WILL NOT BE ACTED UPON.
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