By Lynne Olver
TORONTO (Reuters) - Canadian investors pulled out between C$4.4 billion ($4.1 billion) and C$4.9 billion from their mutual funds in September, the highest amount ever in a single month, according to preliminary estimates from an industry group.
The redemptions were split roughly equally between money market funds and long-term mutual funds, said the Investment Funds Institute of Canada.
"I can't say that it's real shocking, although the number is certainly big," said Dan Hallett, president of investment research firm Dan Hallett & Associates in Windsor, Ontario. "Whenever you have markets that are bleeding red ink, that will translate to net redemptions for the fund industry -- it always has, and it always will."
The data is based on preliminary reports from IFIC members.
Historically, IFIC has seen bigger monthly net redemptions in long-term funds alone, but never this level of redemptions for money market and long-term fund combined, said Dennis Yanchus, the group's manager of statistics and research.
Investors were clearly unnerved by the most volatile financial markets in decades, with the S&P/TSX composite index plunging 15 percent in September.
"It could be that people have seen the troubles of some of the money market funds in the U.S. and that might have triggered some net redemptions here as well, although there are no issues here, as far as I know," Hallett said.
The largest Canadian mutual fund players, Royal Bank of Canada's
RBC Asset Management said its September net redemptions were C$1.2 billion, mostly from money market funds, while its affiliate company, Phillips, Hager & North, had net redemptions of C$97 million, mainly from long-term funds.
The fund manager had attracted "a significant portion" of the industry's net inflows into money market funds in the past year, Brenda Vince, president of RBC Asset Management, said in a statement.
"We now seem to have reached a point where at least some advisers and institutions are redeploying their cash back into the market," Vince said, noting that there were some very attractive alternatives being offered, such as GIC rates.
Hallett noted that government-backed Canada Savings Bonds will be on sale shortly, and might prove attractive to investors wanting a conservative, safe place to stash their money for a few years.
Winnipeg, Manitoba-based IGM Financial, which sells funds through several companies, said net new money in its Mackenzie unit fell by C$137.2 million, more than offsetting a slight rise in net new money at Investors Group.
TD Asset Management reported net redemptions of C$1.15 billion, mostly from money market funds.
According to IFIC, Fidelity Investments Canada was one of the few institute members to report positive net sales, with C$134 million in the month.
CI Financial Income Fund
AGF Management
The Canadian fund industry's net assets fell 8.8 percent from August, to between C$631.8 billion and C$636.8 billion, IFIC estimated.
It will report final September results by the middle of October.
($1=$1.08 Canadian)
(Reporting by Lynne Olver; editing by Rob Wilson)
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