Canadian ETFs maintained momentum in August says National Bank

The latest ETF flows data shows that fixed income remains dominant

Canadian ETFs maintained momentum in August says National Bank

Canadian exchange-traded funds saw almost $3 billion inflows in August, maintaining the momentum of July and taking the year-to-date total to $25.3 billion.

New data from National Bank of Canada reveals that fixed income ETFs remain dominant with $2.6 billion created, beating the $1.8 billion of the previous month. Cash alternative and money market funds pulled in almost $1 billion between them.

There was also a $583 million gain for International Equity ETFs, while Canadian equities posted net outflows of $99 million and US equities were down $76 million. Equity ETFs pulled in a net $408 million overall.

One of the big takeaways for the month is a strong pullback from energy ETFs, posting net outflows of $510 million, the largest in history, with the iShares S&P/TSX Capped Energy Index ETF dropping $467 million despite positive performance in the previous two months.

Meanwhile, technology remained a key focus for investors with funds focused on this sector gaining $160 million. Tech along with financials and healthcare have been in favour this year while materials and energy have weakened as inflation starts to ease.

There was also negative sentiment for cryptocurrencies with Canadian crypto ETFs seeing $201 million in outflows as traders south of the border speculated that the SEC might green-light similar funds in the United States. This decision was delayed.

Year-to-date stats show that fixed income accounted for $15.4 billion of the total $25.3 billion in the first eight months of 2023, while equity saw $7.8 billion. Multi-Asset saw creation of $1.5 billion year-to-date, led by asset allocation portfolio ETFs.

Leading issuers

The top 10 ETF issuers in Canada all had inflows in August except for Invesco.

The largest Canadian ETF issuers were RBC iShares with a 28% market share, BMO (24%), and Vanguard (13%).

Five new ETFs launched in August. New ETF provider Forstrong joined the ETF market with four global region ETFs and AGF launched a covered call ETF.