Investors pumped money into Canadian mutual funds in July at a pace not seen in over two years, and mutual fund net assets hit an unprecedented high, according to the latest data from the Investment Funds Institute of Canada (IFIC).
Exchange-traded funds (ETFs) also saw positive net flows last month, with net sales of $5 billion led by a net $2.4 billion invested in equity funds.
More than half the $5.2 billion in mutual fund inflows went to bond funds ($3.3 billion), with all categories except balanced funds seeing positive net sales. The strong month pushed year-to-date inflows to $1.1 billion, in stark contrast to -$17.6 billion in net redemptions recorded over the same period in 2023, IFIC says.
In a note to investors, Scotiabank analyst Phil Hardie wrote that “the results suggest a return of appetite for non-domestic funds with the reversal of flows largely driven by non-domestic equities, balanced, and fixed-income funds.”
Mutual fund flows have been negative in most months in recent years, a trend many experts attribute to the rise of low-cost ETFs.
Net Canadian mutual fund assets reached $2.137 trillion in July, an all-time high.
Net ETF assets in July were $458.1 billion. All ETF asset categories saw positive inflows, though mostly down from the totals of the previous month. Hardie says the decline was “predominantly driven by a slowdown in passive strategies, particularly fixed-income ETFs.”
IFIC’s data show bond ETF sales went from $5.5 billion in June to $1.5 billion in July. Year-to-date inflows for all ETFs were $37.4 billion, not quite double the $21 billion recorded for the same period in 2023.
John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf.
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