Canadian ETF assets continue to advance

July saw an uptick in launches as well as record flows into fixed-income ETF products

Canadian ETF assets continue to advance

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.


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