Investor demand held firm, but declining markets pushed mutual fund and ETF assets lower overall
Canada’s investment fund industry saw continued inflows in March, but a broad market downturn erased gains, pulling total assets lower across both mutual funds and ETFs.
Data released Tuesday by the Securities and Investment Management Association (SIMA) shows mutual fund assets fell to $2.6 trillion at the end of March, a drop of $93.5 billion or 3.5% from February. Meanwhile, net sales remained positive at $1.6 billion for the month.
ETFs followed a similar pattern with assets down by $10.8 billion, or 1.4%, to $771.1 billion, even as net sales reached $19.0 billion.
The divergence highlights how market weakness outweighed investor contributions during the month.
“Despite continued positive net sales in March, both mutual fund and ETF assets declined as market weakness more than offset new investor inflows,” SIMA’s report states.
Balanced funds once again played a central role in mutual fund sales, bringing in $634 million during March. Specialty funds led all categories with $1.5 billion in net sales, while bond funds added $140 million. Equity funds were the only segment to post outflows, with redemptions of $1.3 billion.
Money market funds also contributed to overall inflows, generating $684 million in net sales.
ETF demand remained particularly strong, with March marking the second highest monthly ETF net sales on record.
Equity ETFs continued to dominate, attracting $12.0 billion, followed by bond ETFs with $3.7 billion in net sales. Balanced and specialty ETFs also posted gains of $1.5 billion and $1.1 billion, respectively.
On a year-to-date basis, ETFs have significantly outpaced mutual funds in attracting new money. ETF net sales totalled $59.3 billion through the first quarter, compared to $17.9 billion for mutual funds.
While asset levels pulled back in March, the persistence of inflows suggests investors remained engaged, continuing to allocate capital even as markets moved lower.
