Fixed income drives Canadian ETF inflows of $716M in September

Fixed income ETFs were the main driver of inflows to Canadian ETFs of $716 million in September, a report from National Bank says.

Fixed income added $652 million, with the Evolve Active Canadian Preferred Share ETF and the BMO Laddered Preferred Share Index ETF ranking in the top 15 for highest inflows last month.

Equity ETFs had net outflows of $27 million, with investors changing from Canadian equity to U.S. equity ETFs. Canadian equity ETFs lost $324 million, while U.S. equity ETFs gained $208 million and international ones gained $89 million.

“This could reflect a growing frustration with the flat Canadian equity market performance year-to-date while the S&P 500 has ripped higher by 10.6% in the same period,” the report says.

The financial and energy sector ETFs had the highest outflows in September, with $14 million and $44 million, respectively. The real estate ($41 million) and basic materials ($21 million) sectors had the largest inflows.

Investors pulled the most money out of the iShares S&P/TSX 60 Index ETF ($377 million) while the Purpose High Interest Savings ETF had the greatest inflow of $153 million. The other ETFs ranked in the top 15 for inflows were fixed income or “ultra-low-cost” passive index trackers for Canadian or U.S. equities, the report says.

A net $14.5 billion has flowed into ETFs so far this year with most of the money being invested in equity ETFs.

As of September, the highest inflows for the year to date have gone to Vanguard, BMO, Mackenzie and Horizons ETFs, the report says.

Read the report here.

U.S. has third month of inflows above $25 billion

Net inflows to U.S. ETFs were $36.3 billion in September, the third month of inflows above $25 billion, a separate National Bank report says.

Equity ETFs accounted for 80% of the inflows, higher than the 66% for the year to date. Investors prefer U.S. over international equities, the report says.

The most popular sector was healthcare, which had $2.6 billion in inflows.

“Healthcare may generally be considered a defensive sector and rotations from material and energy ETFs to healthcare and real estate may signal a more cautious approach on the part of ETF investors,” the report says.

Fixed income had inflows of $6.6 billion, with $70 billion of inflows for the year to date. U.S. government ETFs continued to attract the most money with the iShares 20+ Treasury Bond ETF taking in $1.7 billion.

Read the report here.