Money markets lead mutual fund, ETF sales: IFIC

Mutual fund net redemptions grew in September, and ETF sales rose, according to new data from the Investment Funds Institute of Canada (IFIC).

The industry trade group reported that mutual fund net redemptions came in at $7.6 billion last month, up from $5.6 billion the previous month.

Redemptions in the equities category were essentially flat at $2.2 billion in September, bond fund net redemptions almost doubled from $452 million in August to $890 million, and balanced funds led the way with almost $6.2 billion in redemptions (up from $4.75 billion in August).

Money market funds continued to be the top-selling category in September, generating $1.57 billion in positive net sales.

On the ETF side, money market funds also led the industry sales charts, with almost $1.3 billion in monthly net sales, up from just over $1.0 billion in August.

“Money market fund sales were highest across all major asset classes for both mutual funds and ETFs, with the majority going into high-interest saving account (HISA) funds,” IFIC noted.

The high-interest rate environment has been tough on most long-term mutual fund categories this year.

Through the first nine months of the year, mutual fund net redemptions totalled $30.7 billion, compared with $18.7 billion in the same period last year.

Balanced fund net redemptions have more than doubled so far this year, rising to $37.2 billion from $14.3 billion in 2022.

Equities funds — which were barely in net redemptions at this point last year, with just $409-million worth — have seen net redemptions jump to $15.7 billion this year.

On the upside, bond funds are still in positive sales territory this year, with $7.7 billion in net sales through the first nine months of the year — reversing $8.85 billion in net redemptions for the same period last year.

Specialty funds have managed $2.8 billion in positive net sales this year, up from $1.2 billion in 2022.

Money market funds have been the top seller, generating $11.8 billion in net sales year-to-date, up from $3.6 billion in the same period last year.

IFIC also reported that mutual fund assets under management (AUM) dropped by 3.4% in September, representing a $64.8-billion decline in AUM.

For the year, mutual fund AUM is still up by 1.5%, it noted.

Despite the negative sales trends on the mutual fund side in September, ETFs enjoyed rising net sales.

Monthly net sales rose to $2.9 billion last month (again, led by $1.3 billion in money market funds), up from $1.9 billion in August.

While equity ETF net sales were essentially flat in September at $334 million, and balanced fund sales edged higher, bond fund net sales jumped from $640 million to just over $1.0 billion, and specialty fund sales swung from almost $300 million in net redemptions in the previous month to $18 million in positive net sales.

Notwithstanding the positive sales activity, however, ETF assets declined by 2.4% in September to $346.5 billion, a drop of $8.5 billion in the month.

Year-to-date, ETF assets have gained 10.5%, IFIC reported — an increase of $32.8 billion.

The bulk of that has come from net sales, which totalled $25.9 billion in the first nine months, up from $20.9 billion in the same period last year.

Money market funds have contributed the largest share of net sales, $17.8-billion worth, followed by bond funds at $8.1 billion, and equity ETFs, with $7.3 billion.