Despite HISA hype, fund sales weaken in August

Mutual fund net redemptions picked up pace in August and ETF sales slowed, according to new data from the Investment Funds Institute of Canada (IFIC).

Mutual fund net redemptions rose from $4.8 billion in July to $5.7 billion for August, as long-term fund net redemptions climbed from $5.75 billion to $7.05 billion.

The rise in long-term net redemptions was tempered by an increase in money market fund net sales, which edged up to $1.32 billion from $934 million in the previous month.

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

Both balanced and equity mutual funds saw net redemptions tick higher, but the big move came in bond funds, which swung from $400 million in net sales in July to more than $500 million in net redemptions for August.

Alongside the increase in redemptions, mutual fund assets dropped by $13.6 billion in August, down 0.7% to $1.9 trillion.

Despite the latest decline in assets, IFIC noted that mutual fund AUM is up 5% this year, an increase of $91.1 billion.

ETF net sales remained in positive territory in August but sales declined to $1.9 billion, down from $2.8 billion in July.

While money market sales held up, long-term net sales dropped to $833 million from over $2 billion the previous month.

The decline in long-term ETF sales was led by equity ETFs, which saw monthly net sales tumble to $335 million from more than $900 million.

Additionally, specialty ETF sales swung from modest net sales to almost $300 million in net redemptions.

IFIC reported that just over half (52%) of ETFs had positive net sales in August, compared with just 33% of mutual funds.

Still, ETF assets declined by $1.8 billion in August, sliding 0.5% to $355.0 billion.

Through the first eight months of the year, however, IFIC reported ETF assets were up 13.2%, an increase of $41.3 billion.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.