IFIC data shows money market funds are back in favour
The divergence of mutual funds and ETFs continued in May, according to the latest data from the Investment Funds Institute of Canada.
Mutual funds posted net redemptions of $1.8 billion. It was a smaller figure than in April ($2.7 billion) helped by a bounceback for bond ($1.3 billion net sales vs. $366 million in April) and money market funds ($464 million sales vs. $281 net redemptions).
Balanced funds posted net redemptions of $3.3 billion, down from $3.5 billion in April, but net redemptions for equities was far larger than in the previous month ($920 million vs. $14 million), and specialty fund net sales were down slightly ($623 million vs. $720 million).
Mutual fund total assets reached their second highest monthly level ever behind December 2021 as positive market performance added $44.4 billion, a 2.2% rise to $2.06 trillion. These funds had been negative for three consecutive months, but in May just over half of all money market funds experienced positive inflows. However, year-to-date net sales are 92% down from the same period in 2023.
ETFs
Meanwhile, Canadian ETFs recorded another month of strong net sales at $4.4 billion but slipping from April’s $5.5 billion.
Unlike mutuals, ETFs posted net sales across all major asset classes, although all were lower than in the previous month, significantly for equities ($2.8 billion in May vs. $4 billion in April), and to a lesser extend for bonds ($1.3 billion vs. $1.7 billion). Balanced ($243 million vs. $362 million) and specialty ($22 million vs. $82 million) also recorded lower totals.
The exception was money market funds, which reversed $747 million net redemptions in April with May’s $86 million net sales.
ETF assets totalled $429.2 billion at the end of May, up by $15.6 billion or 3.8%. Year-to-date ETF assets grew by $47.2 billion or 12.4 per cent, which is close to double the growth in absolute terms compared to 2023.
