The Canadian mutual fund industry had its worst month ever in dollar terms in March as it saw more than $14.1 billion in net redemptions — the equivalent of 83 per cent of its total net sales in all of 2019.
The redemptions may have been the result of market-wide portfolio rebalancings that saw investors trade in fixed income to buy equities, according to industry experts. The outflows, according to IFIC, were led by funds with strong exposure to fixed income. Balanced funds saw $11 billion in redemptions, while bond funds shed $6.6 billion.
Before the U.S. Federal Reserve calmed these markets by announcing it would buy corporate credit, the only fixed-income funds trading positively were those made up of cash and U.S. Treasuries, according to Mark Noble, Horizons ETFs senior vice-president of ETF strategy. And while corporate credit is supposed to be a part of the conservative portion of an investor’s portfolio, the panic led to the asset class trading more similarly to equities.
When there’s a turn in the market, investors who are looking to rebalance turn to ETFs for their broad-based index strategies, he said. Those who are already in them tend to hold on to their investments longer than those buying individual stocks because they generally have a longer-term view. That happened again in March, according to IFIC, as ETF equity inflows reached $4.1 billion.
Bad move
And the economic fall out is just beginning. Compounded by poor decision making by the federal government. Who gives 9B to students to save 176,000 jobs and only 1.7B to the energy sector to save 800,000 jobs & thinks this is a good idea? Very hard times ahead for this country.
Perhaps next pandemic, we should be more worried about stopping and identifying the virus coming into the country, then worrying about pandemic precautions looking 'racist'
April: Hold my beer!