IFIC stats reveal cruel summer for mutual funds, but the heat is on for ETFs

Large redemptions recorded for mutuals as long-term funds tumble in latest figures

IFIC stats reveal cruel summer for mutual funds, but the heat is on for ETFs
Steve Randall

As the summer months began, investors in Canadian funds continue to warm to exchange-traded funds while putting mutual funds on ice.

The latest stats from the Investment Funds Institute of Canada reveal that the trend of mutual fund net redemptions continued in July and reached their highest level in 2023 so far. The $4.8 billion figure eclipsed the $4.2 billion in net redemptions seen in June and brought the year-to-date total to more than $17.5 billion.

While every month this year apart from February has posted net redemptions so far, in January they totalled just $477 million, less than 10% of July’s total.

Put into year-over-year context, net redemptions for July 2022 were $4.6 billion and year-to-date totalled $6.6 billion.

Last month’s pullback was all due to long-term funds with balanced funds recording net redemptions of $4.6 billion and equity funds losing $1.9 billion. This was offset by bond (net sales of $396 million), and specialty ($292 million) long-term funds; and money-market funds ($895 million).

Mutual fund assets increased by $19.5 billion or 1% month-over-month to $1.91 trillion. In July 2022 these assets were worth $1.87 billion. 

ETFs up again

Meanwhile, the story for ETFs continued to be a positive one with net sales of $2.8 billion, down from June’s $3.5 billion.  Year-to-date total net sales totalled $21.2 billion.

Net sales were recorded across all asset classes, led by bond ($986 million) and equity ($887 million) long-term funds and total money-market funds ($754 million). Balanced ($133 million) and specialty ($37 million) completed the net sales picture for long-term funds.

Looking back at 2022, net sales for ETFs in July were $1.5 billion and year-to-date total net sales were $17.6 billion.

ETF assets in July 2023 were up $8.3 billion or 2.4% month-over-month to $356.8 billion. In July 2022 these assets were worth $303.7 billion.