Money markets lead mutual fund, ETF sales: IFIC

Redemptions in the equities category were essentially flat at $2.2 billion in September, bond fund net redemptions almost doubled from $452 million in August to $890 million, and balanced funds led the way with almost $6.2 billion in redemptions (up from $4.75 billion in August).

Money market funds continued to be the top-selling category in September, generating $1.57 billion in positive net sales.

On the ETF side, money market funds also led the industry sales charts, with almost $1.3 billion in monthly net sales, up from just over $1.0 billion in August.

“Money market fund sales were highest across all major asset classes for both mutual funds and ETFs, with the majority going into high-interest saving account (HISA) funds,” IFIC noted.

The high-interest rate environment has been tough on most long-term mutual fund categories this year.

Through the first nine months of the year, mutual fund net redemptions totalled $30.7 billion, compared with $18.7 billion in the same period last year.

Balanced fund net redemptions have more than doubled so far this year, rising to $37.2 billion from $14.3 billion in 2022.

Equities funds — which were barely in net redemptions at this point last year, with just $409-million worth — have seen net redemptions jump to $15.7 billion this year.

On the upside, bond funds are still in positive sales territory this year, with $7.7 billion in net sales through the first nine months of the year — reversing $8.85 billion in net redemptions for the same period last year.

Specialty funds have managed $2.8 billion in positive net sales this year, up from $1.2 billion in 2022.

Money market funds have been the top seller, generating $11.8 billion in net sales year-to-date, up from $3.6 billion in the same period last year.

IFIC also reported that mutual fund assets under management (AUM) dropped by 3.4% in September, representing a $64.8-billion decline in AUM.

For the year, mutual fund AUM is still up by 1.5%, it noted.

Despite the negative sales trends on the mutual fund side in September, ETFs enjoyed rising net sales.

Monthly net sales rose to $2.9 billion last month (again, led by $1.3 billion in money market funds), up from $1.9 billion in August.

While equity ETF net sales were essentially flat in September at $334 million, and balanced fund sales edged higher, bond fund net sales jumped from $640 million to just over $1.0 billion, and specialty fund sales swung from almost $300 million in net redemptions in the previous month to $18 million in positive net sales.

Notwithstanding the positive sales activity, however, ETF assets declined by 2.4% in September to $346.5 billion, a drop of $8.5 billion in the month.

Year-to-date, ETF assets have gained 10.5%, IFIC reported — an increase of $32.8 billion.

The bulk of that has come from net sales, which totalled $25.9 billion in the first nine months, up from $20.9 billion in the same period last year.

Money market funds have contributed the largest share of net sales, $17.8-billion worth, followed by bond funds at $8.1 billion, and equity ETFs, with $7.3 billion.