Mutual fund AUM now down for 2023

Mutual fund net redemptions surged in October as investors dumped long-term funds and money-market sales slowed, according to the Investment Funds Institute of Canada (IFIC).

ETF assets dipped too, as negative market action outweighed the still-positive sales.

Overall, mutual funds recorded $12.5 billion in net redemptions last month, marking the eighth straight month of redemptions and leaving mutual fund assets underwater for the year, the trade group said.

October’s net redemptions were up 64% from $7.6 billion in September, and 54% ahead of the $8.1 billion in redemptions for the same month last year.

Long-term funds recorded $13.5 billion in monthly net redemptions, pushing the year-to-date total to over $56 billion.

At the same time, money-market fund sales slipped below the $1-billion mark, having hit $1.6 billion in September.

Balanced funds led the way with $8.6 billion in October redemptions, up from $6.2 billion in the previous month. But equity fund net redemptions almost doubled, jumping to $4.1 billion in October from just under $2.2 billion in September.

Redemptions from bond funds ticked higher as well, coming in at just over $1 billion from $890 million in the previous month.

Alongside the rise in redemptions, weak market performance drove a $28.3-billion drop in mutual fund assets under management (AUM) for October to $1.8 trillion.

With the latest monthly decline, mutual fund assets are now down for the year, IFIC reported, with industry AUM now sitting $1.8 billion below its mark at the start of the year.

Conversely, ETF assets are up by 10.1% on the year to $345.3 billion.

In October, ETF assets declined by $1.2 billion as negative market action overwhelmed continued positive net sales activity. Monthly net sales came in at $2.9 billion for October, essentially flat from the previous month.

However, long-term net sales were up, rising to almost $2.2 billion in October from less than $1.6 billion in September. Bond ETFs led the way, with net sales coming in at $1.4 billion, up from just over $1.0 billion the previous month.

Equity ETF net sales edged higher, climbing to $551 million from $334 million. Specialty fund sales also increased, rising to $100 million in October from $18 million in September.

Among long-term funds, only the balanced category saw net sales decline month over month, with net sales falling to $100 million from $188 million the previous month.

Money-market ETF sales also dropped, falling from almost $1.3 billion in September to $687 million in October.

That drop came ahead of an Oct. 31 decision from the Office of the Superintendent of Financial Institutions on the liquidity requirements for high-interest savings account ETFs, which may lead to lower yields on these products in the year ahead.