It showed that mutual fund net sales totalled $15.2 billion in 2024, the first year of positive net sales since 2021. The funds recorded $43.7 billion and $55.6 billion in net outflows in 2022 and 2023, respectively.
The report attributed the comeback to the strong performance of both stock and bond markets, along with a reduction in inflation, declining interest rates and rising household savings rates, which increased the pot of money available for investments.
On the other hand, ETF net sales totalled $75 billion in 2024. This was the highest total on record for one year, and more than the previous two years’ net sales — $36 billion in 2022 and $37.2 billion in 2023 — combined, the report noted.
Asset class breakdown
For mutual funds, the bond fund category led the way in net sales, with $25.7 billion recorded, “driven by the declining interest-rate environment” in 2024, the report noted.
Specialty mutual funds registered $7.4 billion in net sales, with alternative funds within the category accounting for more than 75% of total net sales.
Money-market funds posted $3.6 billion in net sales and equity mutual funds recorded net sales of $1.3 billion.
The balanced mutual fund category saw significant outflows, amounting to $22.8 billion.
Among ETFs, all major asset categories saw net inflows in 2024, IFIC said.
Equity ETFs received the most buy-in, with $44 billion in net inflows, accounting for 58.7% of total ETF net sales.
Next in line were bond ETFs, which recorded inflows amounting to $20.9 billion, or 27.9% of total ETF net sales.
Balanced ETFs recorded inflows of $5.5 billion, money-market ETFs posted $2.3 billion in inflows and specialty funds generated $2.2 billion in inflows. These categories accounted for 7.4%, 3.1% and 2.9% of total net sales, respectively.
Despite the overall positive net sales in the specialty ETFs category, cryptocurrency ETFs experienced net redemptions in 2024, likely due to investors reallocating their investments to cryptocurrency ETFs in the U.S., which began trading in January 2024, the report noted.
As well, there were 116 investment fund companies offering mutual funds by the end of 2024, offering a total of 3,398 mutual funds. This represented a decrease of four fund managers and a net increase of 14 mutual funds from the year prior.
There were 45 fund companies offering ETFs by the end of 2024, up four from the previous year. Most of these companies (34) offer both ETFs and mutual funds, the report highlighted.
On a net basis, the number of ETFs increased by 117 from the year prior to 1,243.
Responsible investment funds
Despite overall positive net sales for mutual funds and ETFs, responsible investment (RI) funds experienced negative net sales in 2024, which IFIC called a “notable reversal” from previous years.
RI mutual fund assets totalled $44.5 billion, while RI ETF assets totalled $18.3 billion. This represents 2% of total net mutual fund assets and 3.5% of total net ETF assets, respectively.
“The decline in RI fund sales could be a spillover effect from the increased politicization of environmental, social and governance investing in the U.S. and some negative press on both sides of the border,” the report said.
In total, there were 38 RI mutual fund manufacturers and 16 ETF RI manufacturers by the end of 2024, offering a total of 256 RI mutual funds and 102 RI ETFs.
The report noted that IFIC identifies RI funds based on the Canadian Investment Funds Standards Committee’s RI Identification Framework.
Alternative asset funds
Alternative asset funds saw relatively strong sales, which IFIC said reflects “ongoing interest in diversifying [investor] portfolios and the expanding range of alternative fund options.”
By the end of the year, alternative mutual fund assets totalled $28.4 billion and alternative ETF assets totalled $19.3 billion, representing 1.3% of total mutual fund assets and 3.7% of total ETF assets, respectively.
Alternative mutual funds accounted for 37.1% of total mutual fund sales in 2024, IFIC noted. This was the second strongest year for these funds, after 2021.
There were 53 alternative mutual fund and 27 alternative ETF manufacturers.
Moreover, there were 152 alternative mutual funds and 152 alternative ETFs listed in Canada by year-end.
Asset growth
Both mutual fund and ETF assets increased in 2024, standing at $2.24 trillion and $517.6 billion, respectively.
“Over the last 10 years, ETF assets have increased by close to seven times,” IFIC said.
IFIC pointed out that asset growth in investment funds is affected by two factors: overall net sales and the market effect, which refers to the rise and fall of the underlying value of the securities held by the funds.
For mutual funds, assets increased by $303.7 billion from 2023 — and only 5% of this growth was due to positive net sales.
ETF assets increased by $135.6 billion, with 55.3% of this growth driven by positive net sales.
