Fixed income dominates ETF flows

Research shows second-highest monthly inflows for fixed-income ETFs in history

Fixed income dominates ETF flows

Canadian ETF investors took an overwhelmingly risk-off stance in the final month of 2022, according to new data from National Bank.

The latest Canadian ETF Flows report from the Big Six bank showed investors pouring roughly $7.6 billion in total into Canada-listed ETFs in December. That was driven predominantly by investments in fixed-income ETFs, totalling nearly $5.9 billion.

“The inflow into Fixed Income ETFs is also the highest monthly flows on record for this group, bringing the monthly total ETF flows to the second highest in history for Canadian ETFs,” the report said.

Cash alternatives continued to be a popular draw with $1.7 billion in inflows for the month, followed closely by Canadian government ETFs with $1.5 billion.

Short-term fixed income ETFs absorbed $1.5 billion, while broad/mixed bond ETFs and mid-term ETFs were neck-and-neck with $1.1 billion in inflows each.

Canadian aggregate bond ETFs, U.S./North America fixed-income ETFs, and Canadian corporate ETFs saw inflows of $926 million, $748 million, and $741 million, respectively.

Meanwhile, equity ETFs saw around $1.7 billion in December inflows, with the lion’s share going to U.S. equity ETFs ($973 million). Emerging-market equity ETFs attracted $248 million, while Canadian equity ETFs took in $205 million.

Cap-weighted equity ETFs accounted for more than half of total equity ETF flows, pulling in $909 million.

Sector ETFs saw $414 million in flows, driven almost solely by $407 million in capital going into financial ETFs. Allocations to other sector ETF categories were muted, with $27 million each going to healthcare and utilities ETFs.