ETF inflows reach a high for 2019

Canadian ETF inflows continue to be strong, with May having the largest monthly inflows so far this year.

National Bank has reported that Canadian ETF net inflows for the month were $4.3 billion, compared to $2.3 billion the previous month. About half the inflows went to iShares S&P/TSX 60 Index ETF, with the remainder spread among Canadian equity, fixed income and multi-asset ETFs, the report said.

By asset class, Canadian equity ETFs saw $2.6 billion in net inflows, mainly led by broad market ETFs. Among sectors, financial and real estate ETFs had inflows of $29 million and $41 million, respectively, while energy ETFs saw withdrawals (–$93 million) on the back of falling crude prices. Factor-based ETFs had positive flows across most major categories.

U.S. equity ETFs had slight outflows (–$33 million) after four consecutive months of strong inflows. The most popular factor strategy within U.S. equity was low volatility, with $88 million net inflows—a signal of “bearish sentiment and trade jitters rattling the U.S. market,” the report said.

International equity ETFs lost $24 million in May, with emerging markets leading the outflows. The Mackenzie Max Diversification Emerging Market ETF and iShares MSCI Emerging Market ETF lost more than $20 million each, the report said.

Fixed income ETFs inflows of $1.4 billion were led by aggregate bond ETFs, which amassed more than $1 billion. High-yield ETFs continued to lose assets, while investment grade took in new money.

The report said that fixed income flows indicate investors are flocking toward cash, in the form of ultra-short-term ETFs, and market-uncorrelated long bonds, in the form of ETFs focused on longer maturity.

National Bank and CIBC, which filed their first ETF prospectuses last year, had the highest percentage flows in May, relative to assets under management (50% and 27%, respectively).

Five providers launched a combined 11 products during the month, including new ETF provider Accelerate, which launched three liquid alternative ETFs. The Calgary-based firm focuses on providing hedge fund–like and private equity–like strategies. The three ETFs charge a 15%-50% performance fee over a high-water mark, but no flat management fee.

In 2019 so far, a net $10 billion has flowed into Canadian-listed ETFs, split almost equally between equity and fixed income, the report said.

For full details, read the Canadian ETF flows report from National Bank.

Staff

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