Canadian ETF flows hit $2.3B in July

Despite a rare outflow from fixed-income funds, Canadian ETFs gathered $2.3 billion in July, bringing year-to-date flows to $32 billion, according to a report from National Bank of Canada.

Fixed-income ETFs experienced an outflow of $143 million during the month due to an “institutional-sized outflow” from the iShares Global Government Bond ETF, which lost more than $1 billion.

The iShares ETF “gathered significant assets” last year when iShares cut the fund’s fee from 35 bps to 20 bps annually — but whatever institutional manager bought the fund last year “might be now looking elsewhere for yield,” the report suggested.

Although the fixed-income category lost assets, high-interest savings account ETFs once again had a solid month, raking in $352 million.

Equities ETFs had an inflow of $1.9 billion, accounting for 82% of flows in July. The majority of assets ($1.1 billion) went to index-tracking broad-based ETFs investing in Canadian, U.S. and global equities.

Sector-based ETFs attracted $284 million. Investors had mixed market views in July, putting their money toward both cyclical sectors such as financials and technology, as well as defensive sectors such as energy, materials and utilities.

For the first time in 14 months, low-volatility ETFs — which lagged market indexes throughout the rebound last year — had an inflow, taking in $71 million in July.

Multi-asset ETFs, which have never experienced a month of outflows since 2019, remained in demand in July, adding $371 million in assets.

Commodities ETFs had a modest inflow of $53 million, while crypto ETFs, which experienced a “buying frenzy” and racked up billions in assets earlier this year, added only $23 million, the report said.

There were 22 new product launches in July, with environmental, social and governance (ESG) funds emerging as the dominant theme. Franklin Templeton, CI Global Asset Management and CIBC all launched ESG funds last month.

Staff

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