Global equities lead Canadian ETF inflows in strong start to 2024

National Bank report reveals fixed income funds have also started well

Global equities lead Canadian ETF inflows in strong start to 2024
Steve Randall

Canadians’ continued demand for exchange-traded funds continued as 2024 began, with January posting strong inflows following the solid year for the funds last year.

The monthly National Bank of Canada analysis of the ETF market reveals that U.S. and International equities helped the overall equities asset class post $2.8 billion in combined inflows. This included $1.5 billion for U.S. equities, $1 billion for International, and $234 million for Canadian.

Fixed income ETFs also started the year strongly with $1 billion created including $667 million for money market funds, while multi-asset funds gained $370 million and Inverse/Levered gained $111 million. However, crypto-asset ETFs posted outflows of $447 million (10% of their starting assets) which is the second-largest monthly redemption on record since the category was launched in 2021. Commodities lost $39 million.

With the uncertainty around the Canadian economy, ETF investors favoured mid- and long-term bonds and pulled back from short-term options.

The blow dealt to the industry by OSFI’s decision to hike the wholesale liquidity requirement for  High Interest Savings Account (HISA) ETFs to 100% appears to have dented sentiment slightly but these products remained popular in January, the report shows.

ETF providers

January proved a good month for Desjardins, Fidelity, and Hamilton, with the highest flow as a percentage of starting assets. But it was a bad start for CI GAM and Mackenzie with both recording large outflows.

There were 21 ETFs launched last month including Purpose Investments’ expansion of income-oriented products.

RBC iShares, BMO, and Vanguard remain the largest Canadian ETF providers by market share.

Last month, BMO GAM provided their insights into how it sees the ETF industry in the year ahead, including continued growth with a focus on a few themes reflecting more sophisticated ETF investors with more targeted demands.