A bear rests on top of a downward pointing stock chart.

As market turmoil emerged in May, mutual fund net redemptions rose. Yet ETF net sales grew, according to the latest data from the Investment Funds Institute of Canada (IFIC).

IFIC reported that mutual funds recorded $6.4 billion in net redemptions in May, including $7.2 billion in long-term net redemptions. Overall redemptions were up from $4.9 billion in April.

The vast majority of the redemption activity came in the balanced fund category, where net redemptions more than doubled to $5.4 billion in May from just over $2.0 billion in April.

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Equity fund net redemptions ticked up, rising to just under $1.0 billion in May from $700 million in the previous month.

The increase in balanced and equity fund net redemptions came against the backdrop of a decline in U.S. equity markets in May that has only accelerated in June. The S&P/TSX index was more or less flat in May, but markets in Europe and Asia held up better.

While the balanced and equity categories saw redemptions increase in May, bond fund redemptions eased, sliding to less than $900 million last month from $1.75 billion in April.

Mutual fund assets also declined by $18.6 billion (1.0%) to almost $1.9 trillion in the month.

While investors shed mutual funds, ETF net sales picked back up in May, IFIC also reported.

Overall net sales rose to $2.6 billion in the month from $961 million the previous month. The equity category led the way with $1.6 billion in monthly net sales, up from $539 million in April.

Specialty ETFs ranked second with $593 million in net sales, reversing $115 million in net redemptions the previous month.

However, bond ETFs went the other way, recording $235 million in net redemptions in May, down from $322 million in net sales in April.

The strong net sales for ETFs also managed to overcome the weakening markets, enabling an increase in net assets. IFIC reported that ETF assets rose by $0.9 billion to $310.9 billion in the month.