Canadian ETFs set a sales record in June, with bond funds leading the way
Canadian exchange-traded fund (ETF) sales reached an all-time high in June with investors showing unprecedented enthusiasm for bond funds, according to the latest data from the Investment Funds Institute of Canada (IFIC).
Sales of ETFs were just under $10.1 billion in June with net sales gains in every category, and bond funds collecting just over half the total. Investors also spent around $1.2 billion on bond mutual funds, even as overall mutual fund sales saw net redemptions for the third month in a row, with redemptions totalling $1.9 billion.
June sales of bond ETFs were the highest on record, IFIC’s data says. Much of the bond ETF sales were likely a single institutional investor “making strategic long-term allocations” to several BMO ETFs, said Tiffany Zhang, National Bank Financial’s vice-president of ETFs and financial products.
“These BMO ETFs all had very significant institutional-sized inflows around the same time, which was somewhere around the second half of June,” Zhang said.
BMO’s Aggregate Bond Index ETF (ZAG) saw inflows of over $2 billion in the first half, nearly 30 per cent of its total assets under management.
Zhang said the institutional numbers only enhance an already impressive month. “Even if we take [the BMO transactions] out, June would be also pretty strong — a $5-billion inflow and then year to date we would have about $28 billion.”
Total ETF sales for the first half of 2024 were $32.6 billion, around 80 per cent higher than the total for the first half of 2023. On a net basis, investors sold off $3.1 billion of mutual funds in the same time period.
IFIC’s data suggest the 2024 ETF sales totals are nearly equal to 2021 half-year numbers — a time when pandemic conditions helped drive up savings — while a recent National Bank report, which filters out ETFs made up of other ETFs, says the 2024 half-year numbers are a record.
Year-to-date sales of balanced ETFs, equity funds and bond funds were each more than double the corresponding 2023 totals.
Since January, equity ETFs have made up roughly two-thirds of all sales at around $19 billion. Vanguard’s S&P 500 Index fund (VFV.TO) alone brought in $2.9 billion, according to National Bank, becoming the largest ETF in Canada by assets under management.
Nearly half of 2024 equity ETF sales have been funds focused on the U.S. market, which Zhang said “is not a surprise given how the U.S. Equity markets have done.”
Specialty and money market ETF sales were down significantly from last year. Zhang attributes this to an improving risk appetite. Money market funds tend to rise in popularity when investors aren’t certain where the market is going she said, but “now they are seeing more opportunities from other segments within fixed income” or other segments.
In addition to bond funds, money market and specialty mutual funds saw positive net sales in June. Money market mutual fund sales were the highest since March 2020, according to IFIC.
Net assets climbed across both ETFs and mutual funds, with $2.02 trillion in mutual funds at the end of June and $440.5 billion in ETFs.
John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf.
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