ETFs drive fund sales in first half of 2020: IFIC

In a year that has seen extreme market volatility, the fund industry is chugging along led by robust ETF sales, according to the latest data from the Investment Funds Institute of Canada (IFIC).

Mutual fund net sales for the first half of 2020 totalled $7.8 billion, compared with $6.0 billion for the same period in 2019. However, this increase is coming on the strength of a surge in money market fund sales.

Last year, just $143 million went into money market funds in the first half. This year, almost $5.0 billion in sales came in money markets, according to the IFIC data.

Long-term mutual fund sales are down year over year for the first half, dropping from $5.9 billion last year to just under $2.9 billion this year.

At the same time, ETF sales are up sharply this year. Last year, first half sales were $10.8 billion. This year, that’s up to $22.7 billion.

For ETFs, the equity category is powering net sales this year. Through the first six months, equity ETFs have seen $15.4 billion in net sales, up from $3.3 billion last year.

Bond ETFs are a distant second with $3.5 billion in first half net sales.

For mutual funds, bond funds are the strongest long-term fund category this year, with $4.7 billion in net sales.

Equity funds have added another $1.9 billion, and specialty funds are at $2.9 billion in net sales.

However, balanced funds have recorded $6.6 billion in net redemptions so far this year.

It was bond funds leading the way for mutual fund sales again in June, accounting for almost $3.1 billion of net sales activity.

Overall, mutual fund net sales rose from $2.7 billion in May to $3.9 billion in June.

Monthly ETF sales were up too, climbing from $2.6 billion in May to $4.2 billion in June powered by $2.7 billion in equity ETF net sales.

All mutual fund asset categories were in positive sales territory in June — even balanced funds, which recorded $550 million in monthly net sales, up from $740 million in net redemptions in May.

Despite the edge for ETFs in net sales activity, mutual funds still hold a massive lead in assets, with assets under management (AUM) rising by $22.9 billion in June to $1.6 trillion.

ETFs remain a distant second with $217.9 billion in total assets, but they’re steadily gaining ground.

ETF assets rose by $6.5 billion in June, a 3.1% jump from the previous month — double the pace of mutual funds, which gained 1.5% in assets during the month.