Canadian ETF inflows accelerate in July

Industry figures showed strongest appetite for fixed income, another record month for gold ETFs

Canadian ETF inflows accelerate in July

July was another strong month for Canada’s ETF space, with healthy inflows registered for fixed-income and gold bullion ETFs.

According to the latest report from National Bank, Canadian ETFs absorbed $6.2 billion in net inflows last month, overtaking June as the second-largest single month for inflows in 2020. With that, year-to-date net inflows into the space has reached $29 billion.

While fixed-income ETFs led the pack in creations, ETF investors’ risk appetite proved resilient as inflows into equity strategies focused on Canada, the U.S., and international jurisdictions came in at $1 billion, $559 million, and $615 million, respectively. The flows also reflected an apparent return to a home bias compared to June, when international equity ETFs saw the largest inflows.

Total net inflows into fixed income reached $3.7 billion, a new high for the category this year. A large driver of that trend was a large institutional-size block subscription for National Bank’s NUBF, which brought the ETF’s total inflows for the month to $1.6 billion. As for the remaining flows into fixed income in July, the lion’s share went to aggregate bond ETFs as well as cash-like deposit ETFs.

The inflow streak for commodity ETFs also continued as the category took in $119 million. The overwhelming bulk of that went to single long gold ETFs, which reported a $107-million net inflow during a month that ended with spot gold prices within touching distance of $2,000 an ounce; that record was broken a few days later as August began.

“The interest in gold (and other precious metals such as silver) is surging back from all corners of the trading and investing communities,” National Bank noted.

Another report from TD showed a year-to-date picture of Canada’s fund industry as of July 31.

Assets under management in equity ETFs growth by nearly $12 billion in the first seven months of 2020, trailing well behind the $16.5 billion in net inflows into the category because of the COVID-19 market crash.

Fixed-income ETFs fared better, with year-to-date net inflows of $9.9 billion that were comparable to its year-to-date AUM increase of $10.92 billion that came as interest rates around the world were reduced in response to the pandemic’s economic impact.

Commodities, meanwhile, saw comparatively muted growth as net year-to-date inflows of around $660 million came alongside AUM growth of roughly $600 million.


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