Net assets reach record high

By Donna Glasgow | March 24 2011 04:11PM

In 2010, total industry segregated funds assets reached an historical high of almost $88 billion, according to data collected by Investor Economics.

Iassen Tonkovski, associate consultant with Investor Economics says “In terms of growth, both 2009 and 2010 were great for segregated funds. They now account for 10.5% of the investment funds industry. If you look over the last three years, that share is up over 100 basis points. Three years ago they used to represent 9.4% of investment funds. The reason is the faster growth experienced in this fund segment compared to others in the investment fund industry.”
This asset growth is not just due to improved stock market conditions, but also to new sales, notes Mr. Tonkovski. “If you look at 2008 and 2009, you’ll see very positive sales — a sales level that was previously observed during the late 1990s when the segment was growing significantly.”
He adds that during the recent downmarket, total seg fund assets recovered much more quickly than mutual fund assets. It took 19 months for seg funds to bounce back to their May 2008 peak asset level, whereas it took the mutual fund industry 29 months to recover. The main factor explaining this was the positive sales on the seg fund side, whereas the mutual fund industry struggled with negative sales during the down market.
The accompanying table of rankings by net assets shows Manulife Financial in the leadership position with $25.4 billion of assets, giving it a 29% market share. It maintained its first place ranking despite a sharp decline in its 2010 net sales caused by redemptions. Michael Ondercin, Manulife’s assistant vice president of guaranteed investment products, says its leadership in terms of seg fund assets has been driven by continual product innovation that seems to resonate with advisors such as its IncomePlus guaranteed withdrawal benefit that was introduced in 2006. “That has kind of pushed us past Great-West Life who held the number one spot a few years ago,” he says.
The top five insurers maintained their rankings in 2010 from the year before with fourth place Industrial Alliance (IA) increasing its market share from 9.1% in 2009 to 10% in 2010. Strong sales explains this increase. IA was the net sales leader for 2010, doubling its net sales from $476 million in 2009 to $927 million in 2010.
Marie-Élaine Gaudreault, IA's director of product development and training, comments that the year 2010 was a “very, very good year” for Industrial Alliance in the seg fund market. What explains this success? “First of all, the strength of the stock markets contributed. The market recovery helped to our sales.” Also, the quality of the company’s products and the strength of its relationships with its two distribution networks greatly contributed to its sales growth, she adds. IA has a career channel with 1,750 agents in Quebec and a managing general agency network that works with some 12,000 advisors across Canada.