Performance in the stock markets and bond markets have helped restore investor confidence to a degree, and the mutual fund and exchange-traded fund (ETF) industry sales are responding in kind, with the Investment Funds Institute of Canada (IFIC) reporting positive mutual fund net sales for the first time since 2021.

The institute’s 2024 Investment Funds Report, an analysis of investing trends and mutual fund and ETF sales and assets under management, says several factors contributed to the growth in mutual fund and ETF sales throughout the year. In addition to market performance, they say a drop in inflation, a more stable economic environment, declining interest rates and rising household savings also contributed.

Exchange traded funds assets rise dramatically 

“Mutual fund assets reached record highs in the second half of 2024 and by year-end, increased by 15.7 per cent (compared to 7.1 per cent in 2023),” IFIC stated in an announcement about the publication’s release. “In a notable milestone, ETF assets crossed the $500-billion mark in 2024, achieving a dramatic 35.5 per cent increase in assets.” 

They say at the end of 2024, Canadian mutual fund assets reached $2.242-trillion, a 15.7 per cent increase, while ETF assets reached an all-time high of $518-billion. One year ago, mutual fund net assets sat at $1,939-trillion while ETF net assets were $382-billion. 

Net sales of mutual funds, meanwhile, totalled $15.2-billion by the end of 2024, the first year of positive net sales since 2021. “Over the last two years, mutual fund assets have increased by $433-billion, recovering from a decline during 2022.”

ETF net sales were $75-billion, “the highest total ever and more than the previous two years combined,” they write.

Alternative mutual fund assets were $18.4-billion and alternative ETF assets totalled $19.3-billion, representing 1.3 per cent of total mutual fund assets and 3.7 per cent of total ETF assets, respectively. Balanced funds made up the majority of mutual fund assets while equity funds accounted for the majority of total ETF assets. “The continued growth in sales of alternative mutual funds reflects investors’ ongoing interest in diversifying their portfolios and the expanding range of alternative fund options,” they state.

Likely troubling for responsible investing (RI) advocates, however, is the decline in net sales for that category. “The decline in RI fund sales could be a spillover effect from the increased politicization of environmental, social and governance (ESG) investing in the U.S. and some negative press on both sides of the border,” the report states. “This is a notable reversal from previous year when RI fund sales outpaced the industry overall.” At the end of 2024, $44.5-billion was invested in RI mutual funds while $18.3-billion was invested in RI ETFs. “The represents two per cent of total mutual fund assets and 3.5 per cent of total ETF assets, respectively.” 

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