ETF flows in Canada surge in first half of 2020

ETFs in Canada saw net flows of $22.4 billion through the first six months of the year, the most in a decade and more than double last year’s gains for the same period, a report from National Bank of Canada Financial Markets says.

Equity ETFs attracted $15.2 billion in the first half of the year. Of the $4 billion that flowed into ETFs in June, equity ETFs accounted for 60%, “a remarkable display of risk appetite on the part of ETF investors after waves of pandemic-induced volatility,” National Bank’s report said.

From January to June, capitalization-weighted index funds saw net flows of $10.7 billion, far more than any other category. But sector ($2.2 billion) and thematic ($1.3 billion) ETFs also performed well, the report said, surpassing flows for dividend ($580 million) and factor funds (which were negative).

ESG funds led the way in thematic ETFs, with year-to-date net flows reaching $1.2 billion, or 75% of the category’s starting assets, the report said.

Financial, materials, healthcare and technology sector ETFs all saw flows greater than 10% relative to starting assets in the first half of the year.

Fixed income flows through the first six months totalled $5.2 billion. Investors “have been showing a clear preference for higher credit quality (aggregate bond) and safety (cash alternative), driving outflows from ETFs that hold Canadian corporates exclusively,” the report said.

The top five funds by inflows in the first half of the year were:

• Horizons S&P/TSX Capped Composite Index ETF ($1.3 billion)
• Horizons Cdn Select Universe Bond ETF ($1.2 billion)
• CI First Asset High Interest Savings ETF ($991 million)
• BMO S&P 500 Index ETF ($922 million)
• Horizons S&P 500 Index ETF ($845 million)

New products picked up in June, with five different providers launching 23 new ETFs last month.

Wealthsimple’s two new responsible investing ETFs launched with $190 million in assets each, the report said, while TD Asset Management launched five active funds.

Hamilton Capital Partners also launched five funds, while Fidelity added eight ETFs to its factor suite, plus a fixed income fund. CI launched an active fund based on the economic impact of longer lifespans.

Mark Burgess

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Mark was the managing editor of Advisor.ca from 2017 to 2024.