Fund flows could be more ‘muted’ as volatility takes hold: BMO

A record net $24.6 billion in cash piled into Canadian funds last year in the first quarter.

A record net $24.6 billion in cash piled into Canadian funds last year in the very first quarter, an occasion when Canadians have a tendency to put money aside and contribute to their Registered Retirement Savings Plans, but inflows this year “may well be more muted” as volatility got its toll on global markets and shatters investors’ confidence, BMO Capital Markets analysts said in a note Wednesday.

Canada’s mutual fund industry is coming off its best year for flows – albeit just – with companies reporting total net sales of $55.2 billion, up one percent from 2014. Balanced funds that hold stocks and bonds are capturing the most of the incoming cash, as investors look for diversification, particularly outside of Canada.

Domestic equity funds reported redemptions of $822 million in December, while bond funds recorded net redemptions of $668 million. Net sales into U.S. and global funds were $3.1 billion, or nearly 3 times around the industry’s total net sales of $1.1 billion.

Of 5 best-selling fund types in December, four were global or U.S.-focused. Of the five worst, four were Canadian, reflecting the continuing flight from our slumping equity markets and devaluing loonie.

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