Mutual fund buyers are edging back into long-term funds after a year of embracing short-term funds, according to the latest numbers from the Investment Funds Institute of Canada.

IFIC reports that December net sales almost reached $2.2 billion, with about $1 billion of that in long-term funds and the balance in short-term funds. Through most of last year, short-term funds dominated as investors sought shelter from the rough markets. With markets recovering, it appears that long-term funds are recovering too.

Within the long-term category, bond funds still represented the biggest selling category, with $231 million in net sales for the month. Foreign equities were also popular, with U.S. equity funds picking up almost $198 million in net sales, and international equities grabbing another $183 million. Most of the balance went into dividend funds, Canadian equity funds and balanced funds in almost equal proportions.

Since it was the year-end, reinvested distributions were also a big factor during December, adding another $2.4 billion to long-term funds. This pushed net sales including reinvested distributions to just under $4.65 billion for the month.

On an annual basis, mutual fund net sales in 2001 surpassed net sales in 2000 by 25%. However, long-term net sales were down by 47.5% year over year. “The year 2001 ended on a positive note. Sales for 2001 were 26% higher than year-to-date sales of 2000,” stated Tom Hockin, IFIC’s president and CEO. “Long term fund continued to gain ground in December, they were up 10% from last month while money market sales decreased by 54%.”

The resurgence of markets and long-term sales boosted the independent firms in December, at the expense of the banks. Total assets under management increased in December to $426.4 billion, up 2.8% from $414.9 billion in November. Leading firms in the month include AIM, Mackenzie, AIC, Clarington, Guardian and Synergy. The banks and Investors Group generally lagged, as did C.I., Altamira and Spectrum.

IFIC also reported the total number of member unitholder accounts at 52.0 million, a 3.5% increase over one year ago. Assets are up 1.8% from last December’s figure of $418.9 billion.