TORONTO (Reuters) - Canadian mutual fund investors were spooked in October as dismal stock markets prompted redemptions estimated at roughly C$8.5 billion ($7.4 billion), an industry group said on Tuesday.
That comes on the heels of net redemptions of C$4.5 billion in September, the Investment Funds Institute of Canada said.
Equity markets were difficult for managers of all pooled investments, including pensions, exchange-traded funds and mutual funds, Pat Dunwoody, a vice-president of IFIC, said in a statement.
According to preliminary estimates, net fund redemptions in October were between C$8.2 billion and C$8.7 billion.
IFIC also said that overall net assets managed by the industry likely fell 9.93 percent in October from the previous month, to between C$573.2 billion and C$568.2 billion.
The Toronto Stock Exchange’s benchmark index, the S&P/TSX composite, lost 17 percent in October, hitting 9,762.76 by month-end. It has since recovered some ground, closing on Tuesday at 10,116.58, up 4.07 percent.
Dunwoody said that credit conditions had improved somewhat in late October, and this will “hopefully” lead to better valuations in equity markets.
Royal Bank of Canada, the country’s largest fund manager, said combined assets in its RBC Asset Management Inc and Phillips, Hager & North units fell by 8.5 percent in October.
Net redemptions of long-term funds amounted to C$902 million, or about 1 percent of assets under management, while net redemptions of money market funds totaled C$1.1 billion, RBC said.
Another big player, Toronto-Dominion Bank’s TD Asset Management Inc, said its net redemptions were C$1.12 billion, split roughly equally between long-term and money-market fund redemptions.
“Redemptions in long-term funds were experienced across the funds industry as unprecedented volatility unsettled many investors,” Tim Pinnington, president of TD Mutual Funds, said in a statement.
“As a result, many investors opted for guaranteed term products during the month.”
Reporting by Lynne Olver; editing by Rob Wilson