Fund sales mixed, assets up in first half: IFIC

Mutual funds edged further into net redemptions in June, but net sales of ETFs rose, according to the Investment Funds Institute of Canada (IFIC).

The industry trade group reported that mutual funds recorded $4.2 billion in overall net redemptions in June, up from $3.8 billion the previous month.

Long-term funds posted $5.8 billion in redemptions, compared with $5.0 billion in May. At the same time, however, net sales of money-market funds rose from $1.25 billion to $1.54 billion, tempering the rising redemptions.

Balanced funds led the redemption activity, with outflows rising to $4.4 billion in June, up from $3.8 billion in May. Equity fund redemptions also rose, climbing to $2.35 billion last month from $2.2 billion the previous month.

For the first half, long-term mutual funds recorded $20.7 billion in net redemptions, up from $4.4 billion in the same period last year.

However, money-market fund net sales were up to $7.9 billion through the first six months of 2023, from $2.4 billion for the same period in 2022.

With the rising sales of money market funds partially offsetting the surge in long-term fund net redemptions, overall mutual fund net redemptions came in at $12.8 billion for the first half, up from just over $2 billion in the same period last year.

Despite the rise in redemptions, mutual fund assets continued to grow in June. They totalled $1.89 trillion at the end of June, up by 1.6% from the previous month.

In the first half, total mutual fund assets were up 4.7%, and over the previous 12 months, assets rose 5.9%, IFIC reported.

ETF activity

Net sales rose in June on the ETF side of the industry.

Total monthly ETF sales came in at $3.5 billion, up from $2.4 billion in May. Long-term sales jumped to $2.8 billion in June from $1.5 billion in May, and money-market fund net sales slowed to $649 million in June from $868 million in the previous month.

While balanced fund sales were flat in June, equity ETF net sales almost doubled in the month, jumping to $1.07 billion in June from $565 million in May, and bond ETF net sales climbed to $1.18 billion from $838 million.

For the first half, total ETF net sales were up modestly, climbing to $18.4 billion from just over $16.0 billion for the same period last year.

However, long-term ETF net sales were actually down a bit. In the first half of 2022, long-term net sales came in at $14.25 billion. This year, long-term net sales dipped to $13.3 billion for the same period.

In particular, equity ETF net sales dropped from $9.54 billion in the first half last year to $5.46 billion this year.

Conversely, bond ETF net sales for the first half jumped to $5.5 billion this year from $2.8 billion last year. And, money-market fund net sales more than doubled from $1.8 billion in the first six months of 2022 to $5.1 billion this year.

Alongside the stronger ETF sales trends, assets rose more decisively than on the mutual fund side, with total assets rising by 2.8% in June to $348.4 billion.

Through the first half, ETF assets were up by 11.1%, and over the previous 12 months, assets have grown by 20.6%, IFIC reported.