Fixed income sees Canadian ETFs surge to new record

National Bank analysis of the market shows further increase in providers

Fixed income sees Canadian ETFs surge to new record

The strength of the Canadian ETF market continues unabated with a new record reached in the first half of 2024.

A new analysis from National Bank of Canada shows that gains led by fixed income funds in June boosted the six month flow figure to $33 billion. Last month saw a huge $9.7 billion inflows to Canadians ETFs, a new record which beats the previous record (set in February 2020) by 25%.

The net inflows for fixed income funds in June of $6.8 billion bring these funds to more than $12 billion year-to-date. All categories gained in June except for preferred shares ETFs. Canadian aggregate bond and Canadian corporate bond were the leading funds with $2 billion inflows each while money market ETFs created $1.3 billion.

“Unlike the prior two years when cash ETFs were all the rage and virtually alone in the spotlight, inflows into fixed income ETFs have been quite widespread across different categories,” the NBC report states.

Equities saw a net $2.3 billion in June but this was down from the previous month as inflows of $1.4 billion for Canadian and $1.2 billion for international equities were offset by $432 million in withdrawals from US equity funds. The half-year total was more than $19 billion.

Crypto-Asset ETFs saw $20 million in redemptions last month.

An institutional shuffle was the key driver of record ETF flows in June and also resulted in the largest inflow total by provider as BMO enjoyed $5.8 billion inflows driven by institutional investments in its low-cost core exposure ETFs.

RBC iShares remains the largest provider of Canadian ETFs with a 24.7% market share, ahead of BMO at 23.2%, and Vanguard at 13.8%.

There was one new ETF provider in June, Quadravest. The Toronto based firm was founded in 1997 and specializes in creating and managing enhanced yield products. It manages over $5 billion in assets and a diverse portfolio of 13 publicly traded investment products. Its Preferred Split Share ETF is “designed to provide monthly distributions and capital preservation primarily through investment in a portfolio of split corp. preferred shares listed on a Canadian exchange” according to its website.