Investors dumped mutual funds last month leaving the industry with net redemptions of almost $4.5 billion, according to data released by the Investment Funds Institute of Canada (IFIC).

It was the biggest withdrawal on record, in terms of dollars. The redemptions represented 0.64 per cent of assets under management and by that measure, it was the biggest since January 1995.

IFIC said total assets under management plunged to $633.6 billion at month-end, down 8.9 per cent from August 2008 and 9.7 per cent from a year earlier.

Investors pulled $2.46 billion out of money market funds and $1.99 billion from long-term funds, as credit markets seized up and Canada's benchmark S&P/TSX stock index plummeted 2,108 points or 14.6 per cent.

The industry's year-to-date net sales stand at $10.6 billion, down from $27.8 billion in the first nine months of last year, IFIC said. IFIC said that while last month's declines were steep "they remained below what was seen in August 1998 for most asset classes."

The biggest shrinkage of asset value on record, at 10.59 per cent, took place in August 1998 amid the Russian ruble-devaluation crisis.

Assets in long-term funds, high-profit equity, bond and balanced products, declined 9.6 per cent last month compared with 12.5 per cent in August 1998, as opposed to low-margin money market funds, IFIC said.

"There is no doubt that September has been a difficult month for investors of all stripes," commented Pat Dunwoody, IFIC's vice-president of communications.

"We welcome recent actions taken by governments to support the global financial system and we expect that these actions will help restore some order to markets going forward," he adds.