By James Langton

(April 16 – 13:10 ET) – Mutual fund sales are slumping in the face of market volatility, according to the latest statistics from the Investment Funds Institute of Canada.

In March, net sales for all funds excluding re-invested distributions were just under $4 billion. More than $2.1 billion of that amount came from money market funds. Of the $1.9 billion of net sales into long-term funds, the top category was foreign equity with about $537 million. Balanced funds came next with $361 million, and $348 million went into Canadian equity funds. Another $256 million was invested in U.S. equity funds.

“March sales are down from March 2000 by 10% due primarily to market volatility. Sales are also down from February 2001 by 19%, which is typical for the month after RRSP season, and is better than the end of RRSP season last year when they declined 32%,” says Tom Hockin, IFIC president and CEO. “Although the weak equity markets appear to have dampened March sales, we are optimistic sales will strengthen later in the year as the equity markets are expected to improve.”

During March, industry assets shrunk to about $403 billion, down about 2.3%. With the strong performance of money market funds the banks held up best, with TD Bank and Scotia as the only fund firms in the top 20 that saw their assets increase during the month. Among the independents, Clarington continued to see some strong growth and McLean Budden had a decent month.

The firms that were hit hardest in March include AIC, AIM, C.I., Franklin Templeton, PH&N and Altamira. AIC fell furthest among the big companies, with assets dropping 6.1% to $13.4 billion. As a result of these slides among the independents, Royal passed AIM for second spot overall based on assets, and TD leapfrogged over AGF into sixth spot.

Through the first quarter, long-term net sales are down 44% to just $6.6 billion from $11.8 billion in the same period last year. Money market funds have made up most of the slack, with $4.5 billion in first quarter net sales this year, up from just $500 million last year.

IFIC also reported the total number of member unitholder accounts reached 52. million, a 7.7% increase from a year ago.