Industry report shows outsized increases among ESG funds and liquid-alternative funds
Even with a global pandemic, a lockdown-induced recession, and the spectres of economic malaise and growing inequality, the total AUM in Canada’s investment fund industry grew by more than $2 billion last year, according to the Investment Funds Institute of Canada (IFIC).
In its latest annual industry report, IFIC noted that AUM in mutual funds rose by $158.8 billion to $1.78 trillion last year, while ETF assets increased $52.2 billion to reach $257 billion. “Due to positive sales and positive market effect, mutual fund and ETF assets increased by a combined 11% throughout 2020,” the report said.
From a sales perspective, mutual funds saw net sales of $31 billion, an increase of 83% over the previous year, while ETF net sales reached $41.5 billion on the back of 48% year-on-year growth. Gross sales for mutual funds amounted to $300 billion, a historic record.
By the end of 2020, Canada had 112 companies offering mutual funds, a decrease of five firms over the previous year that was attributed to consolidation. “Also largely due to consolidation, throughout 2020, on a net basis, the number of available mutual funds decreased by 37, bringing the total number of funds on offer to 3,459,” the report said.
There were 39 Canadian ETF managers with a total of 853 funds at the end of 2020, with 107 ETFs – mostly active – added over the course of the year.
“The majority of Canadian mutual fund assets at year-end 2020 were in the balanced fund category comprising 49% of total fund assets. … Equity funds were the second largest category, with 33% of assets,” IFIC said. In contrast, equity strategies accounted for 61% of total ETF assets, followed by bond funds at 31%
Responsible investing assets, the report said, ended the year with $17.3 billion held in 94 RI mutual funds across 26 firms, while $2.8 billion in RI assets were held in 50 RI ETFs by 13 firms.
“Responsible investment fund assets grew by 55% in 2020, compared to 11% growth for the fund industry overall,” IFIC said.
Alternative mutual funds also saw disproportionate growth, with assets doubling from $5.8 billion at the end of 2019 to $12.2 billion a year later; liquid-alt ETFs went from $2.4 billion to $2.9 billion over the same period. Thirty-five firms offered 81 alternative mutual funds by the end of 2020, and ten firms were offering 57 liquid alternative ETFs.
