Investors pulled nearly $5 billion from Canadian mutual funds last month amid market turmoil

The S&P/TSX Composite Index closed Tuesday at 20,286.20.Cole Burston/The Canadian Press

Canadian investors pulled billions of dollars from their mutual fund investments last month, while lower stock prices slashed the industry’s total assets by $87.5 billion.

Mutual fund assets are down 4.4 percent from March 2022, falling to $1.914 trillion at the end of April, according to the latest data from the Canadian Mutual Funds Institute.

The decline in assets was mostly due to stormy markets as inflation and interest rates began to shake up a pandemic savings boom that saw billions of dollars funneled into the Canadian asset management industry. Stock markets rallied throughout the pandemic after a slight dip in March 2020. Now, the markets have turned sharply with the S&P 500 down for the seventh week in a row, its longest streak in 21 years.

The S&P/TSX Composite Index closed Tuesday at 20,286.20.

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Last month, for the first time in nearly 18 months, mutual funds also saw $4.9 billion in net redemptions, compared to $1.12 billion in net sales in March 2022.

Net sales is the total amount of money the company brings in, which represents any refunds investors make for taking money out of their mutual funds.

The influx of investment dollars is a dramatic change from the previous year, which saw the first four months of 2021 generate more than $51.2 billion in mutual fund sales. By comparison, sales in 2022 have been steadily declining with sales of only $13.2 billion for the same period.

Balanced mutual funds – which Investing in various asset classes, including stocks and bonds – took the biggest hit, with recoveries worth $2.05 billion, compared to sales of $272 million in March 2022.

Bond funds continued their payback streak with the third consecutive month of outflows. April’s tally posted the highest bond fund outflows this year with $1.75 billion in redemptions, compared to $503 million in redemptions in March.

Exchange-traded funds have also felt the wrath of the markets, with assets down $14.7 billion, or 4.5 percent, to $310 billion, as of April 30. This is below a record high of $347 billion in total ETF assets, at the end of December 2021.

Despite the unfavorable markets, ETFs continued to attract investors with sales of $1 billion for the month of April 2022. ETFs had the highest sales of $533 million, followed by ETF bonds with sales of $322 million.

The ETF’s stock inflows were in large part due to institutional allocations in ESG funds, which accounted for 70 percent of sales, said Daniel Strauss, director of ETF research at National Bank Financials.

In contrast, Mr. Strauss said, low-volatility ETFs suffered a month of outflows, despite strong relative returns, as did preferred stock ETFs, Canadian government bond ETFs, and Canadian corporate bond ETFs. , which lost all assets.

Crypto-asset ETFs – which collectively hold about $5 billion in assets – suffered their largest single month of outflows since the asset class was introduced to Canada in February 2021. About $338 million inflows from Bitcoin and Ethereum ETFs in April, A figure that represents 5.5 percent of the class’s initial assets.

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