Mutual fund redemptions slow in December: IFIC

December was the 10th consecutive month of net redemptions for mutual funds, though the monthly outflow continued to slow.

Data from the Investment Funds Institute of Canada (IFIC) released Thursday showed mutual fund net redemptions were $5.3 billion last month, compared to $8.6 billion in November and $12.5 billion in October.

Redemptions were driven by outflows from balanced and equities funds, IFIC’s report said, while bond funds, money-market funds and specialty funds all had net inflows.

For all of 2023, money-market funds led with $14.8 billion in net sales — more than double the previous year. Bond mutual funds were second, with net sales of $7.0 billion compared to redemptions of $13.8 billion in 2022. And net sales of specialty mutual funds came in third at $3.4 billion — more than two and a half times greater than in 2022.

Overall, mutual fund redemptions totalled $57.1 billion in 2023, compared to $43.7 billion in redemptions in 2022, IFIC said — an increase of 30.5%.

On the ETF side, net sales were $3.8 billion in December, compared to $5.1 billion in November and $2.9 billion in October.

ETF money-market funds had net redemptions of $271 million in December — the first month of negative money-market sales since November 2021, the report said. A National Bank Financial report from earlier this month noted the change in investor appetites toward year-end as rate expectations shifted.

The IFIC report said bond ETFs accounted for 48% of net inflows ($1.82 billion), with most going into Canadian bond funds. Equities ETFs accounted for 47% of net sales ($1.77 billion), with the largest share going to U.S. funds.

Overall, ETF net sales were $37.6 billion in 2023, compared to $36.1 billion in 2022 — an increase of 4.2%.

For the second consecutive month, both mutual fund and ETF assets increased in December, the report noted.

Mutual fund assets totalled $1.94 trillion at the end of December, up by $43.0 billion or 2.3% month over month, and up by $126.5 billion or 7.0% year over year.

ETF assets totalled $382.5 billion at the end of December, up by $13.2 billion or 3.6% since November, and up by $68.8 billion or 21.9% year over year.