Mutual funds remain out of favour for Canadian investors

The divergence between Canadian mutual funds and exchange-traded funds (ETFs) escalated in August.

Mutual funds posted $3.1 billion in net redemptions in the month according to the latest stats from the Investment Funds Institute of Canada (IFIC). This is lower than the $4.5 billion net redemptions of the previous month but a huge turnaround from net sales of $9 billion in August 2021.

Meanwhile, ETFs continued in the opposite direction, posting net sales of just below $1.5 billion, only slightly short of the July figure.

The pullback from mutual funds was led by balanced long-term funds ($2.4 billion net redemptions) but equity, bond, and money markets funds were also negative.

Specialty funds bucked the trend with net sales of $89 million, but overall mutual funds net redemptions year-to-date totalled $10.3 billion compared to $90 billion in net sales in the same period of 2021.

Mutual fund assets totalled $1.827 trillion at the end of August 2022. Assets decreased by $37.6 billion or 2.0% compared to July 2022. 

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ETFs remain in focus

Meanwhile, Canadian ETFs maintained their winning position, with the near-$1.5 billion in net sales taking the year-to-date figure to $19 billion, however this is less than half the figure for the same period of 2021.

Equity ETFs led the pack with $1.2 billion in net sales with positives for balanced, specialty, and money market funds. However, bonds posted net redemptions of $347 million.

ETF assets totalled $298.7 billion at the end of August 2022. Assets decreased by $5.0 billion or 1.6% compared to July 2022.

_{* Important Information Regarding Investment Fund Data:}

_{1. Mutual fund data is adjusted to remove double counting arising from mutual funds that invest in other mutual funds.}

_{2. Starting with January 2022 data, ETF data is adjusted to remove double counting arising from Canadian-listed ETFs that invest in units of}

_{other Canadian-listed ETFs. Any references to IFIC ETF assets and sales figures prior to 2022 data should indicate that the data has not}

_{been adjusted for ETF of ETF double counting.}

_{3. The Balanced Funds category includes funds that invest directly in a mix of stocks and bonds or obtain exposure through investing in other}

_funds.

_{4. Mutual fund data reflects the investment activity of Canadian retail investors.}

_{5. ETF data reflects the investment activity of Canadian retail and institutional investors}