Fund redemptions hit $1.25-billion

Monday, November 4th, 2002


Canadians yanked $1.25-billion out of mutual funds in October, the seventh consecutive month that the fund industry has seen more money exiting than coming in.

The loss comes despite a rebound in North American stock markets. According to preliminary figures provided by the Investment Funds Institute of Canada, net redemptions for the month of October are between $1.1-billion and $1.4-billion.

In September, the worst month for mutual funds in at least a decade, investors yanked $1.1-billion from mutual funds, with $800-million of that figure coming from stock funds.

In September, fears of a war between the United States and Iraq as well as soft U.S. economic news trashed investor sentiment and sent North American stocks plunging to multi-year lows.

October proved to be a better month for the indexes and the severe losses abated. During that month, the Dow Jones industrial average – a gauge of 30 U.S. stocks – rose 10.6 per cent, its second-best performance ever.

Canada’s benchmark index also rose, although much more modestly. The S&P/TSX composite index added 1.1 per cent.

Although softer-than-hoped-for U.S. economic news continues to pour in and a war between the U.S. and Iraq remains on the horizon, investors were determined to push beaten-down stocks higher in October.

RBC Funds Inc. suffered the biggest blow that month, with net redemptions of $428-million. AGF Management Ltd. was not far behind, logging a loss of $255-million.

Fidelity Investments reported net redemptions of $158-million, Investors Group lost $110-million and BMO Funds dropped $112-million.

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