News on May 09 mutual fund sales

Mutual fund sales in Canada:

• Look strong and solid in May 09
• Industry asset under management (AUM) up around 4%
• $$ flow in to long term funds (LTF) from money market fund (MMF) start from Mar and continue in May
• + $1.8B inflow to LTF
• - $0.9B outflow from MMF
• % of AUM in MMF continue to go down from 14.2% in Mar, to 13.5% in Apr and to 12.9% in May;
• % of AUM in MMF hit the bottom during the period of late 06 and mid 07 to 8%;

Outlook:

• Total AUM (from top 25 industry players) as of May 09 is about $565B, so MMF as of May 09 is about $72B;
• Assume 12 months market return on LTF & MMF are 8% & 1%;
• Assume 12 months' net sales on LTF excluded fund switch from MMF is 2%
• Assume % AUM on MMF will go down to 10% from 12.9% in 1 year
• Based on the above assumption, the switch from MMF to LTF in the coming 12 months will be around $11.2B. Plus LTF inflow excl MMF switch, the inflow to LTF will be around $21B
• This additional $21B should be able to push the equity market to a higher point or at least make it more stable compare to the past 6 months

Top 10 industry players in Canada (estimated AUM as of May 31, 09) per IFIC:

1. RBC $101B
2. IGM $89B
3. CI $54.9B
4. TD $49.2B
5. CIBC $42.2B
6. Fidelity $37.8B
7. BMO $31.2B
8. Trimark $27.7B
9. AGF $20.9B
10. Dynamic $19.6B

All these top players, especially the bank should be benefit from this switching trend and their fee incomes should be improved from bottom low.