So far in my Profit Confidential write-ups, I have provided you with a few tips on how to deal with tax changes in terms of income trust, as well as tips on how to diversify your portfolio. Next on my list are Canadian mutual funds. Interestingly, while November was the month marked by the market’s volatility, the Canadian mutual fund industry seems to have weathered the tough times just fine. Apparently, Canadian investors dunked CDN$2.3 billion into that asset class.
The highest numbers came from bank-owned mutual fund companies, such as RBC Asset Management Inc., which took the first place with CDN$742.0 million in net sales, followed by TD Asset Management with CDN$431.0 million in net sales and CIBC Asset Management, with CDN$209.0 million in net sales. By all accounts, Canadians still like their mutual funds very much and have no problem investing in them.
But, what about all those mutual fund redemptions I have been harping on about in the past? Well, just because banks’ mutual funds are doing well, does not mean everyone else is having the same luck.
Eight mutual fund companies reported net redemptions last month, the top three starting with CI Investments with CDN$180.0 million in net redemptions. These guys simply experienced a huge withdrawal of large institutional accounts. Then there was AIM Funds Management Inc. with CDN$117.0 million and AIC Ltd. with CDN$57.0 million in lost business.
So, what you should be talking to your broker about is your exposure to Canadian mutual funds. Obviously, with buying pressures focusing on bank-owned mutual funds, this is certainly a category worth looking into. Also, if you own any of the mutual funds that have reported net redemptions instead of net sales for the past three months, perhaps it’s time to cut your losses. But, most importantly, regularly reviewing your portfolio and investment strategies could prove priceless in the long run.