Canadian ETF monthly inflow reaches highest level in a year

Canadian ETFs gathered $7 billion in new assets in May — the highest single month of inflow in over a year, National Bank said in a monthly report.

Equities funds drove the result, accounting for more than half ($3.6 billion) of net ETF flows in the month, with passive, cap-weighted equities dominating, the report said.

Year-long outflows from low-volatility ETFs abated, with investors redeeming $21 million from the funds — the smallest amount in five months, the report said.

Within fixed income’s monthly inflow of $1.6 billion, foreign bond ETFs led, offset by outflows from cash alternative ETFs.

“Investors have been deploying cash into [risk] assets as vaccine rollouts around the world show signs of mitigating the pandemic and its economic effects,” the report said.

Demand for crypto-asset ETFs continued, attracting more than $1.3 billion in flows — almost as much as fixed income — despite the relatively new category’s volatility.

Multi-asset ETFs had $642 million in flows in the month. “Demand for asset allocation ETFs remains evergreen — the category has never logged a monthly outflow since it exploded in 2018,” the report said.

Investors withdrew money from commodity ETFs (mostly gold) for a second month in a row, with the category having $24 million in outflows.

Year-to-date ETF inflow was $25 billion at the end of May, the report said.

May also had 16 new ETF launches, most of which were equities funds focused on energy, tech and health care, and Wealthsimple launched Canada’s first ETF with a Shariah-compliant mandate.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.