Skip to main content

The Globe and Mail

The feeling’s mutual: Canadians turning back to equity funds

ROB Insight is a premium commentary product offering rapid analysis of business and economic news, corporate strategy and policy, published throughout the business day.

Equity markets professionals have been excitedly talking about a "great rotation" out of bonds and into stocks. Recent data from the United States shows a shift back into equities, but there was little evidence of such a move in Canada – until now.

In January, equity-only mutual funds experienced their first month of net sales (that is, sales less redemptions) since February of 2011, chalking up a net gain of $272.5-million. That is especially noteworthy because the last two positive months, February, 2011, and February, 2010, were both RRSP deadline months; you have to go all the way back to May, 2009, to find the last positive month for equity funds that wasn't bolstered by the RRSP deadline, and then October of 2007 before that.

Story continues below advertisement

Whether this shift is sustainable is another matter.

January's gain could suggest that investors are losing their fear of equity mutual funds – perhaps in reaction to rising equity markets or because of relief that the U.S. didn't plunge over the fiscal cliff. But there is, as yet, no compelling case to believe that a great rotation into stocks is under way in Canada.

In fact, the appeal of bond funds continues unabated – investors bought a net $1.3-billion worth of bond funds in Canada in January, up 16 per cent from the previous month. The fact that Canadians are continuing to plunge into the bond market when interest rates are rising off historic lows – rather than abruptly moving out in concert with a move into equities – suggests equities still carry a taint.

Canadians' caution may reflect the fact the resources-laden benchmark S&P-TSX composite index has turned in a more humdrum performance over the past year than the S&P 500 in the U.S. Or maybe Canadians are minding the warnings from some market watchers that a period of near record highs on U.S. stock markets is no time to be getting into stocks. Either way, if a great rotation has begun, it has yet to roll north across the U.S. border in any convincing way.

Sean Silcoff is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow Sean on Twitter at @seansilcoff.

Report an error Licensing Options
About the Author

Sean Silcoff joined The Globe and Mail in January, 2012, following an 18-year-career in journalism and communications. He previously worked as a columnist and Montreal correspondent for the National Post and as a staff writer at Canadian Business Magazine, where he was project co-ordinator of the magazine's inaugural Rich 100 list. More


The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at