A strong finish for RRSP season

Mutual fund net sales turned positive in February and ETF assets set a record, closing RRSP season on a high, according to new data from the Investment Funds Institute of Canada (IFIC).

Following a weak January, mutual funds recorded $3.2 billion worth of net sales last month, in line with the same month in 2023.

“Mutual fund net sales were positive after 11 consecutive months of negative net sales,” IFIC noted.

The turnaround in mutual fund sales came as equity fund sales swung to almost $1.6 billion in monthly net sales, from over $1 billion in net redemptions in the previous month.

And while balanced funds didn’t manage to get into positive territory, redemptions slowed sharply in February, declining to less than $900 million from $4.5 billion in January.

At the same time, bond fund net sales stayed positive. In February, bond funds managed $1.8 billion in net sales, down from $3.8 billion the previous month. With the sales bump in February, the industry totalled $2.7 billion in net sales for the first two months of 2024, a decline from $3.3 billion in the same period last year.

Alongside the improvement in net sales, mutual fund assets crept back above the $2 trillion mark too. Assets under management (AUM) rose by $57.1 billion in the month, up 2.9%, to $2.01 trillion, IFIC reported.

ETF assets hit a record high in February, surpassing the $400 billion mark for the first time. Total AUM rose by $16.0 billion last month to $403.7 billion, an increase of 4.1%.

While market gains led the way, ETF net sales contributed $5.5 billion too, as monthly net sales rose from $3.2 billion in January.

Through the first two months of the year, net sales totalled $8.7 billion, more than double the total recorded in the same period last year ($3.6 billion).

Equity ETFs continued to lead the way with $4.0 billion in monthly net sales, up from $2.4 billion in January.

Bond ETFs also saw sales jump, rising from $321 million in the previous month to $1.2 billion in February.