Mutual fund redemptions continue in November

November represented the ninth consecutive month of negative sales for mutual funds, according to data released by the Investment Funds Institute of Canada (IFIC) on Wednesday. On the positive side of the monthly ledger, both mutual funds and ETFs saw assets under management (AUM) grow for the first time in three months.

Mutual funds recorded net redemptions of $8.6 billion in the month, down from redemptions of $12.5 billion in October, IFIC said in a monthly report. Balanced, equity and bond funds all continued to have redemptions.

Money market funds were an outlier, generating $1.2 billion in net sales, up from $997 million the previous month. Specialty funds saw $397 million in net sales, up from $199 million in October, mainly driven by alternative funds, the report noted. 

Year-to-date, redemptions totalled $51.9 billion. Balanced funds led with $52.3 billion in redemptions year-to-date compared to $25.0 billion in redemptions in the same period last year. Equity fund redemptions more than quadrupled to $23.2 billion so far this year from $5.4 billion in redemptions in the same period last year.

Aided by rising interest rates, bond mutual funds experienced net sales of $6.2 billion so far this year compared to net redemptions of $11.6 billion in the same period last year.

Overall, mutual fund assets increased by $85.1 billion, or 4.7%, since October to reach $1.9 trillion at the end of November.

Despite negative sales for mutual funds, “every major ETF asset class generated positive net sales in November,” the IFIC report said.

ETF net sales were $5.1 billion, up from $2.85 billion in October. Equity funds accounted for 56% of the total, or $2.84 billion.

Year-to-date, bond ETF sales nearly doubled, to $10.1 billion from $5.8 billion in the first eleven months of 2022. Sales slowed in November, however, with bond ETFs garnering $582 million compared to $1.4 billion the previous month as interest rates stabilized.

Specialty ETFs experienced high monthly sales growth, growing almost tenfold to $1 billion from $102 million in October. Balanced ETF net sales nearly doubled, to $196 million from $100 million in October.

Conversely, money market ETF sales decreased $235 million to $452 million month over month in November. 

In the first 11 months of the year, ETFs recorded net sales of $33.9 billion, compared to $28.4 billion during the same period in 2022.

ETF assets totalled $369.3 billion at the end of November, up by $24 billion, or 6.9%, compared to October, the industry trade group reported.