More than half of the $5.2 billion that flowed into mutual funds was directed toward bond funds. All categories, except balanced funds, saw positive net sales. (Photo by Gary Hershorn/Getty Images) (Gary Hershorn via Getty Images)
In July, Canadian mutual funds witnessed their largest surge in sales in more than two years, according to the latest figures from the Investment Funds Institute of Canada (IFIC). Investors poured money into these funds, driving their net assets to a record high.
Exchange-traded funds (ETFs) also saw a positive trend, attracting $5 billion in net sales. Equity funds led the charge, bringing in $2.4 billion of the total.
Bond funds were the major beneficiaries, drawing in $3.3 billion—more than half of the $5.2 billion inflow into mutual funds. This marked a significant turnaround from last year’s net redemptions. While balanced funds experienced a slight decline, all other categories saw positive net sales. The strong performance of bond funds pushed the year-to-date inflows to $1.1 billion, a stark contrast to the $17.6 billion in net redemptions during the same period in 2023.
Scotiabank analyst Phil Hardie highlighted a renewed interest in non-domestic funds, especially in equities, balanced, and fixed-income funds. He suggested this shift indicates investors' growing appetite for diversifying beyond domestic markets.
For the past several years, mutual funds have generally seen negative flows, largely attributed to the rising popularity of low-cost ETFs. However, July’s strong showing bucked this trend and set new records for mutual fund assets. Net assets in Canadian mutual funds hit an unprecedented $2.137 trillion.
On the ETF side, total assets reached $458.1 billion in July. Although inflows were positive across all ETF categories, the overall growth slowed compared to the previous month. According to Hardie, this deceleration was primarily due to a drop in passive strategies, particularly within fixed-income ETFs.
Specifically, bond ETF sales, which were robust in June at $5.5 billion, dropped to $1.5 billion in July. Despite this slowdown, ETFs as a whole had a strong year, with $37.4 billion in year-to-date inflows, nearly doubling the $21 billion recorded during the same period in 2023.
