Canadians pile into ETFs in April, with U.S. equity funds dominating #CanadaFinance

Canadians put $5.462 billion into exchange-traded funds (ETFs) in April, the second-largest monthly inflow in the last year, with more than half of those investments going to U.S. equity funds, according to the Investment Funds Institute of Canada (IFIC).

IFIC says 74 per cent of ETF investments to date in 2024 have been in equity funds. It adds that all ETF asset classes saw net inflows in April, “except for money market funds, which experienced net redemptions in three of the previous five months.”

After two months of positive numbers, mutual funds returned to net redemptions, with $2.708 billion withdrawn in April after net sales of $272 million in March and $3.221 billion in February. This resumes a longer-term trend of net redemptions from mutual funds and net sales of ETFs.

Exchange-traded funds have been a perennially popular choice, with net redemptions in only two months since January 2022.

April’s ETF net sales were slightly lower than those in February, when net sales reached $5.479 billion. Net sales in those two months were the two highest since March 2023. Year-to-date ETF net sales are roughly 50 per cent higher than this time last year.

Mirroring North American market performance in April, net assets in the two fund types declined, with mutual funds down two per cent to $2.033 trillion and ETFs down 0.9 per cent to $413.6 billion.

IFIC says specialty funds were the largest source of mutual fund inflows. “More than half of these inflows were directed towards non-traditional fixed-income funds designed to provide yield, as well as alternative credit funds,” the institute said. Bond funds also saw positive net sales.

John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf. Download the Yahoo Finance app, available for Apple and Android.