July saw an uptick in launches as well as record flows into fixed-income ETF products
Canadian ETFs gained even more assets in July, revealed the Canadian ETF Association (CETFA) in its latest industry report.
The Canadian industry saw AUM reach $183.7 billion by the end of July, coming from the growth of 14.8% and net creations amounting to approximately $22.1 billion over the trailing 12-month period. Net creations for last month reached some $1.66 billion, compared to just roughly $200 million as recorded by CETFA.
The top ETFs by net creations for the month reflected a continued interest in fixed-income ETFs. BMO Long Federal Bond Index ETF (ZFL), classified as having an investment-grade fixed-income exposure, registered net creations of $374 million; the BMO Aggregate Bond Index ETF (ZAG), placed in the same category as ZFL, netted $142 million in inflows. The Mackenzie Emerging Markets Bond Index ETF (CAD-Hedged), launched just last month on the TSX with the ticker symbol QEBH, collected $140 million in net inflows.
Also among the top-selling ETFs for July were the BMO Low Volatility Canadian Equity ETF (ZLB), a Canadian equity strategy, with net creations of $220 million; and the iShares Core MSCI EAFE IMI Index ETF (XEF), an international equity fund, which netted $175 million.
The dominance of fixed-income ETFs was made even clearer in a report on Canadian ETF flows from National Bank of Canada. Recording total industry inflows of $1.8 billion for the month of July, it attributed $1.5 billion to fixed-income ETFs; that represented the largest fixed-income ETF inflow in the past two years.
“July’s eye-popping fixed income flow tally was spread among almost all categories except Canadian corporates,” the National Bank report said.
Canadian equity ETFs, meanwhile, reportedly saw $243 million in net redemptions, principally due to withdrawals from broad-market and financial-sector ETFs. On the other hand, the popularity of asset-allocation ETFs has bolstered inflows for multi-asset ETFs; alternatives ETFs, which National Bank counts as multi-asset, have also seen rising inflows.
“Alternatives are an old category that may be receiving a shot in the arm from regulatory changes allowing for wider latitude in hedge-fund style portfolio concentration and long-short strategies among all ‘alternative mutual funds’ (including ETFs),” the report said.
It also noted a pick-up in the pace of new launches, with four providers launching a combined 17 products (including five U.S. dollar units) last month. The launches covered a variety of categories including active bonds, alternative mutual funds, emerging-market bonds, and thematic technology ETFs.