Canada-listed ETF assets slipped in Q3 amid net creations

Fixed income takes the lead in creations, with investment-grade bond funds capturing the lion's share

Canada-listed ETF assets slipped in Q3 amid net creations

Despite experiencing continued net creations this past summer, Canada-listed ETFs still experienced a mild asset decline in the third quarter, according to the Canadian ETF Association (CETFA).

Drawing from Investor Economics data, CETFA noted that assets declined by 0.5% to $376.6 billion at the end of the three-month period ended September.

The $8.3 billion in net creations in Q3 marked a 14.25% slowdown relative to Q2, CETFA said. Still, the year-to-date net creations of $30.2 billion until September was $6.95 billion more than the tally for the same period in 2022.

The largest ETF category, equity, accounted for $2.1 billion in net creations for the quarter, including $1.3 billion attracted in July. Canadian equity mandates took in a $1.4-billion chunk of the creations, followed by $723 million going into emerging markets equity and $360 million for international equities.

Fixed income, meanwhile, garnered $3 billion in net creations.

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“Investment grade bond funds were responsible for the lion’s share of net sales, as mix bond funds outsold the broader category with $1.1 billion in quarterly net creations,” CETFA said.

Corporate and government bond funds had a combined total of $1.6 billion in net creations, while high-yield bond ETFs saw $317 million flow in overall.

The third-quarter record showed positive net creations for 25 out of Canada’s 42 ETF sponsors, CETFA said.

Vanguard Canada was the front runner with $1.6 billion in net inflows, followed by $1.3 billion for Horizons ETFs. BlackRock Canada was a distant third, taking in $741 million in quarterly net creations, though it did sponsor the best-selling ETF for the period.

From a product development perspective, CETFA said 38 ETFs made their debuts on Canadian exchanges during the third quarter.

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BMO Asset Management was the most active in expanding its ETF shelf, with eight ETFs launched in the third quarter. Horizons ETFs and Invesco, meanwhile, launched six ETFs each.

“Looking at product development, Q3 saw 38 ETFs added to the Canadian exchange. In terms of asset class composition, the quarter’s launches continued favouring equities, as 29 funds had equity mandates, while fixed income mandates had five ETFs,” CETFA said.