Equities dominate Canadian ETF flows in Q1

Canadian ETFs had inflows of $4 billion in March, significantly lower than the $6 billion inflow it saw in February, according to a report by the National Bank Financial on Tuesday.

Net inflows for Canadian ETFs in the first quarter of 2024 came in at $13.9 billion.

So far this year, equity ETFs saw a $10.2 billion inflow, while fixed income ETFs saw inflows of $2.8 billion. In the same period, money market ETFs were essentially flat with a net outflow of $37 million. Crypto-asset ETFs had $684 million in redemptions — some 14% of their starting assets.

In March, the inflows into equity ETFs were led by demand for U.S. ($1.8 billion) and international equity ($1.5 billion). Meanwhile, Canadian equity ETFs retreated by $312 million, according to the report.

Eleven ETFs were launched last month, including two managed by machine learning or artificial intelligence models. Notably, the AI-themed Invesco Morningstar Global Next Gen AI Index ETF saw inflows of $104 million in March — the third month since its inception.

“We expect experimentation around this area to continue given the hype around generative AI,” National Bank Financial said.

The outflows from Canadian-listed crypto-asset ETFs are in contrast to the continued inflows to U.S.-listed Bitcoin ETFs. In the first quarter of this year, investors pulled out 8% of their starting assets from Purpose Bitcoin ETF (BTCC/B) and 13% from Purpose Bitcoin ETF (BTCC/U).

Several large ETF providers also experienced outflows in March, as investors redeemed from specific products or themes. For example, Horizons saw more than $1.7 billion of redemptions between its Horizons Cdn Select Universe Bond ETF and Horizons US 7-10 Year Treasury Bond ETF. In the same month, RBC iShares and Vanguard each took in more than $1 billion of inflows.

Jonathan Got

Jonathan Got is a reporter with Advisor.ca and its sister publication, Investment Executive. Reach him at jonathan@newcom.ca.