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Mutual fund sales rise 2% in a 'pretty solid' RRSP season

Mutual fund net sales rose 2 per cent during this year's registered retirement savings plan (RRSP) season from a year ago, as investors remained jittery after last fall's market volatility.

Net inflows into funds edged up to $9.7-billion in January and February from $9.5-billion last year, with most new money going into balanced funds that invest in both stocks and bonds, according the Investment Funds Institute of Canada (IFIC).

The higher-fee long-term stock and bond funds took in $11.5-billion this season, slightly below $11.6-billion last year, according to figures released on Thursday.

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"Overall, the RRSP season has been pretty solid," said Canaccord Genuity analyst Scott Chan.

Mr. Chan said that the long-term sales number beat his expectations slightly, but noted that most of the money went into conservative balanced and bond funds. (He had projected long-term net sales of $12- to $14-billion for the first quarter of this year.)

Investors, however, continued to yank cash from equity mutual funds. They withdrew $2-billion from this asset class in the first two months versus outflows of nearly $1.4-billion last year.

The RRSP season may have benefited from more buoyant stock markets this year, and investors wanting to get the annual tax deduction, Mr. Chan added. "People were hesitant to invest in the last six months of last year."

The S&P/TSX Total Return Index rose about 6 per cent for the first two months, while the S&P 500 Total Return Index in Canadian dollars climbed 5.8 per cent.

Investors also continued to withdraw cash from short-term money market funds, pulling the trigger on $1.7-billion this year compared with about $2-billion last year.

More investors have been plowing cash into high interest savings accounts introduced by certain banks and insurers. These accounts can provide a higher yield than money market funds, which typically charge management fees.

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Even though some major fund companies have cancelled their membership with IFIC, the industry group has been able to report industry figures because it also gets numbers and estimates provided by research firm Investor Economics. CI Financial Corp. and Invesco Canada Ltd. (formerly Invesco Trimark) are no longer members of IFIC.

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