National Bank of Canada's latest ETF flows report highlights shifting risk appetite of investors
Canadian exchange-traded funds (ETFs) recorded another strong month of inflows in June according to the latest analysis from National Bank of Canada.
A total of $4.4 billion flowed into funds during the month with a rebound for equity ETFs putting the asset class little more than $100 million behind fixed income ETFs with $1.8 billion vs. $1.9 billion.
“We now observe a shared appetite for both equities and fixed income, and this reflects the new economic reality after a year of aggressive rate increases by the central banks in efforts to clamp down inflation,” National Bank’s report stated.
The boost for equity ETFs came from international equities (adding $986m and dominated by $808m for emerging markets) and Canadian equities (inflows of $755m), while US equities slipped to $72 million and a year-to-date net outflow of $1.5 billion.
The industries attracting the most interest were financials, energy, and tech.
Fixed income
Fixed income’s $1.9 billion inflows were led again by money market funds with $792 million inflows, with Canada aggregate bond, Canada government bond, and foreign bond lagging but still positive, while there were continued redemptions for sub-investment grade bonds and preferred share ETFs.
“The craze for money market or “cash-like” exposure seems unstoppable, especially now that these ETFs are yielding in the neighborhood of 5%,” the report notes.
Multi-asset ETFs posted inflows of $163 million, inverse/levered posted $92 million, and commodities attracted $3 million.
With BlackRock filing a new application for a cryptocurrency ETF in the United States, renewed interest was seen in Canadian crypto ETFs in June.
The asset class saw inflows of $337 million but posted a year-to-date net of just $35 million having suffered redemptions earlier in the year.
New ETF launches
June had ten new ETF launches, with eight of them from BMO, one from Brompton, and one from Hamilton.
