March proves both a lion and a lamb for fund sales

Mutual fund sales plunged in March, yet ETF sales held up, according to the latest data from the Investment Funds Institute of Canada (IFIC).

Last month, which included the final day of RRSP season, mutual funds registered just $922 million in monthly net sales, including $820 million in long-term fund sales.

This represented a steep drop from both the previous month, and the same month a year ago.

Overall fund sales topped $13 billion in March last year, and long-term funds recorded more than $14 billion in monthly net sales. And, in February, long-term funds generated $9.8 billion in net sales, with overall net sales reaching $9.9 billion.

According to IFIC, balanced funds recorded just $212 million in monthly net sales for March, down from over $5 billion in February, and almost $9 billion in the same month a year ago.

Equity funds managed $1 billion in monthly net sales in March, down from $4.6 billion in the previous month, and $4.5 billion in March 2021.

And, bond funds slipped further into net redemptions. In March this year, bond funds had $524 million in net redemptions, down from $155 million worth in February.

The weak March translated in a soft first quarter for mutual funds, which saw $17.6 billion in long-term net sales, down from $45.7 billion for the same period last year.

Despite the sharp drop in sales, mutual fund assets under management (AUM) ended the month slightly higher, up by $4.1 billion, or 0.2%, and back above the $2.0 trillion mark.

While mutual fund sales dropped off a ledge in March, ETF sales actually edged higher.

IFIC reported that total ETF sales rose from just over $4.0 billion in February to $4.6 billion in March. Long-term sales climbed from $3.6 billion to $4.5 billion month over month.

Compared with the same month last year, sales were off a bit — ETF net sales in March 2021 were $4.7 billion — but they held up much better than mutual fund net sales.

For the first quarter, ETF sales this year finished at $13.2 billion, down from $14.5 billion in 2021.

Equity funds led the way in March, with over $2.2 billion in net sales, down from $3.1 billion in February.

However bond funds weren’t far behind, generating over $1.5 billion in monthly net sales, reversing the $53 million in net redemptions recorded in the previous month.

ETF assets also performed far better than mutual funds in March, with industry AUM gaining 2.4% in the month ($7.5 billion) to finish at $324.7 billion.