TORONTO (Reuters) - Canadian mutual fund assets under management rose in February from January and surged from a year earlier, buoyed by stronger equity markets and a move by investors back into long-term funds.
Assets under management rose 2.1 percent to C$597 billion ($585.3 billion) in February from a month earlier, the Investment Funds Institute of Canada said on Monday. They rose 25.2 percent, or C$120.1 billion, from February 2009.
February is a strong month for mutual funds in Canada as investors scramble to max out their registered retirement savings plan contributions ahead of the March 1 deadline to defer taxes from the previous year.
With the markets in turmoil last year, many investors chose to sit on the sidelines, parking their cash in low-yielding short-term money markets, rather than in long term funds.
Net sales for funds in February totaled C$3.1 billion, up from C$693.5 million in January and C$1.68 billion in February 2009.
“While we were expecting an improvement over last year, we were surprised by just how strong fund sales were this RRSP season,” Pat Dunwoody, vice president of member services and communications at IFIC, said in a statement.
“Long-term fund sales for the first two months of 2010 were better than they have been in nine out of the last 10 years.”
Long-term fund sales came to C$5.09 billion in February, up from C$3.14 billion in January and $258.9 million a year earlier. For the first two months of the year, they rose to C$8.22 billion from C$64.4 million at the same period last year.
Long-term fund sales were overwhelmingly focused on balanced funds, showing that investors continued to seek ways to offset pure equities exposure with other products. Fixed income funds and equity funds followed.
Assets in money market funds, which involve trade in short-term obligations like Treasury bills, declined by just under C$2 billion.
Investors have taken C$4.44 billion out of money market funds over the first two months of the year, compared to C$2.78 billion in net sales in the same time frame last year
Reporting by John McCrank; Editing by Frank McGurty