ETF sales in June were just under $10.1 billion, with positive results across all categories. (Richard Lautens/Toronto Star via Getty Images) (Richard Lautens via Getty Images)
Sales of Canadian exchange-traded funds (ETFs) hit a record high in June as investors showed unprecedented enthusiasm for bond funds, according to the latest data from the Investment Funds Institute of Canada (IFIC).
ETF sales rose to just under $10.1 billion in June, with all categories seeing net sales increases and bond funds making up just over half of the total. Investors also spent about $1.2 billion on bond mutual funds, but overall mutual fund sales saw a third consecutive month of net redemptions, bringing total redemptions to $1.9 billion.
Bond ETF sales hit a record high in June, according to data from IFIC.Tiffany Chan, vice president of ETFs and financial products at National Bank Financial, said much of the bond ETF sales likely came from a single institutional investor that made a “strategic long-term allocation” to multiple BMO ETFs.
“All of these BMO ETFs saw very large institutional-scale inflows around the same time in late June,” Zhang said.
BMO’s Aggregate Bond ETF (ZAG) saw inflows of more than $2 billion in the first half of the year, roughly 30% of its total assets under management.
Zhang said the institutional figures added to an already strong month. [the BMO transactions] June was also pretty strong with $5 billion in inflows, bringing year-to-date inflows to about $28 billion.”
Total ETF sales in the first half of 2024 were $32.6 billion, up about 80% from the total in the first half of 2023. On a net basis, investors sold $3.1 billion worth of mutual funds in the same period.
According to IFIC data, total ETF sales in 2024 are roughly on par with the figures for the first half of 2021, when the pandemic situation contributed to increased savings, while a recent National Bank report, which excludes ETFs made up of other ETFs, said the figures for the first half of 2024 were record.
Year-to-date sales for balanced ETFs, stock funds and bond funds are each more than double their 2023 totals.
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Since January, equity ETFs accounted for roughly two-thirds of total sales, reaching about $19 billion. Vanguard’s S&P 500 Index Fund (VFV.TO) alone generated $2.9 billion in sales, making it Canada’s largest ETF by assets under management, according to National Bank.
Nearly half of equity ETF sales in 2024 will be funds focused on the U.S. market, which Zhang said is “not surprising given the trend of the U.S. stock market.”
Sales of specialty and money market ETFs are down significantly from last year, which Chan attributes to increased risk tolerance. Money market funds tend to be more popular when investors are unsure of how the market will perform, but “right now investors are finding more opportunities from other segments within fixed income and other segments,” Chan said.
In addition to bond funds, money market funds and specialized mutual funds also saw positive net sales in June, with money market mutual fund sales reaching their highest level since March 2020, according to IFIC.
Net assets increased in both ETFs and mutual funds, with mutual funds at $2.2 trillion and ETFs at $440.5 billion at the end of June.
John MacFarlane is a senior reporter for Yahoo Finance Canada. Follow him on Twitter. Follow.
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