The sales drought goes back to 2008 and 2009, when the markets crashed and burned, leaving investors with colossal losses.
Although, even as they continue to rise from the depths of 2009, prospective investors continued to be tuned out.
According to the Investment Funds Institute of Canada, last year, equity funds had net redemption of $14.1 billion. That’s an increase from $10.8 billion, recovered a year earlier. Apparently, there is no immediate sales turnaround, even during the peak investing season we’re currently in.
An exception to the trend of redemptions, are exchange-traded funds. With $56.4 billion in assets, in every category, ETFs are a smaller industry than mutual funds, but this is starting to narrow.
ETF assets increased by 30% last year, three times mutual fund rates. The majority of this money was delegated to fixed-income funds; however, sales of equity ETFs stayed positive.
One allure for retail investors is, once they obtain an ETF; they pay the same per unit management fees for small holdings, while institutional investors have to pay for their multi-million-dollar holdings.
Whether via ETFs or mutual funds, fund investors who bought equity funds close to the bottom, or who stayed invested following a market mauling reward. In 2012, was a turn-a-round for domestic equity funds.
For higher fixed-income yields in 2013, investors will have to accept more risk, look at investment-grade corporate bonds, and more adventurous assets like emerging markets bond’s and high-yield bonds.