A positive start to 2025 for mutual funds, ETFs

Mutual funds and ETFs started off the year on a high note as net sales and assets soared for both fund categories in January, the Investment Funds Institute of Canada (IFIC) said on Monday.

In its monthly investment fund statistics report, the industry trade group reported that mutual fund net sales came in at $3 billion, up from $2.6 billion the previous month.

This marked a “a notable improvement compared to the same period last year when sales were negative,” with $780 million in net redemptions recorded in January 2024, IFIC noted.

Bond funds led the way, generating $3.3 billion in positive sales this January, up from $1.9 billion the previous month. This was the top-selling asset class among mutual funds for the past nine months, the report noted.

Specialty funds recorded $1.4 billion in net sales, up from $503 million a month prior. And money-market fund net sales came in at $852 million, up from $721 million in December.

These gains were partially offset by a decline in equity and balanced mutual fund net sales.

Equity mutual funds entered negative territory in January, with net redemptions amounting to $2.1 billion. This was a marked drop from the $107 million in net sales recorded for the asset class a month prior.

Meanwhile, balanced mutual funds recorded net redemptions of $388 million in January, a slight improvement from $573 million in net redemptions the previous month.

Mutual fund assets rose by 3.1% on a month-over-month basis, adding $68.9 billion in assets under management (AUM) to reach $2.3 billion by the end of January.

Over the previous 12 months, mutual fund AUM increased by 18.3%.

For ETFs, January was the third most successful month in terms of net sales on record, trailing only December and June 2024, IFIC said.

ETF net sales totalled $9 billion in the month, down from $10.7 billion in December.

All ETF asset classes were in positive territory in January. Equity ETFs, for one, generated $4.8 billion in net sales, a decline from $7.9 billion a month earlier.

Bond ETFs recorded net sales of $1.7 billion, a drop from $2.1 billion month over month.

Balanced ETF net sales totalled $745 million, up from $712 million.

Specialty ETFs produced $870 million in net sales, an improvement from $81 million in net redemptions recorded the previous month.

And money-market ETFs generated $816 million in net sales, an increase from $99 million in December.

ETF assets grew too, with AUM reaching $541.4 billion at the end of January, up by $23.7 billion or 4.6% since December.

On an annual basis, ETF AUM grew by 39.8% as the funds remained hot among investors.