Mutual funds saw $44B in net redemptions last year: IFIC

Amid market volatility and shifting economic conditions, the mutual fund industry recorded $44.1 billion in net redemptions last year, while ETFs managed to remain in positive sales territory, according to the latest data from the Investment Funds Institute of Canada (IFIC).

Mutual funds finished the year on a sour sales note, with $8.7 billion in overall net redemptions in December. The industry group reported $10.3 billion in long-term fund net redemptions, while $1.6 billion flowed into money market funds in the month.

The monthly net redemption activity in December was more or less in line with the results for November, and the industry finished the year with both major asset classes in negative sales territory.

The balanced category was hit hardest, with $30.0 billion in net redemptions for 2022, followed by bond funds at $13.8 billion and equity funds with $8.5 billion.

The $51.1 billion in net redemptions last year in long-term mutual funds came on the heels of $121 billion in net sales in 2021.

In terms of assets under management, IFIC reported that mutual funds finished the year with just over $1.8 trillion in assets, down about 13% from almost $2.1 trillion at the start of 2022.

While mutual fund sales dropped and assets tumbled last year, ETFs held up better.

IFIC reported that overall net sales for ETFs came in at $36.1 billion, which was down from $58.7 billion in the previous year but firmly in positive territory.

However, almost $10 billion of the net sales activity came in money market funds. Long-term net sales were $26.3 billion, down sharply from $59.4 billion in 2021.

Each of the major asset categories managed positive net sales in 2022, but activity declined from the previous year.

The equity category led the way with just under $14 billion in net sales for the year, down from $34.5 billion in 2021.

Bond ETFs recorded $9.3 billion in net sales, down from $12.4 billion, while balanced funds had $1.6 billion in net sales compared with just under $4 billion the previous year.

ETF assets also held up somewhat better than mutual fund AUM, with an assist from the money market category.

Total assets finished the year at $313.7 billion, down by about 10% from $347.1 billion at the start of 2022.

Long-term assets were down in step with the mutual fund sector, though, declining by about 13% during the year. However, money market assets jumped from $6.6 billion at the start of the year to $16.3 billion by the end of 2022, cushioning the overall decline in ETF assets.

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.