Canada’s ETF industry recorded net inflows of $18.2 billion in July, mainly owing to strong investor demand for equity funds, National Bank Capital Markets (NBCM) said in a report on Wednesday.
This brings year-to-date ETF inflows to $122.5 billion, with equity ETFs making up 66% of total creations so far this year.
“Despite ever-increasing valuations, increased AI industry dominance, worries about profitability, global geopolitical conflicts and trade wars, investors have signalled their inclination towards growth by their relative preference for equities over fixed income,” the report said.
That was evident in July, with equity ETFs gathering $12.5 billion of the total monthly inflows, compared to fixed-income ETFs, which took in $3 billion.
On a regional basis, international equity funds led the way with $5.1 billion in net inflows, followed by Canadian equity funds at $4.5 billion and U.S. equity funds at $2.9 billion.
By sector, financials equity ETFs were the most popular in July, taking in $426 million. Next in line were utilities, health-care, “other,” technology and materials equity funds, which gathered net inflows of $187 million, $108 million, $91 million, $89 million and $18 million, respectively.
Those gains were partially offset by energy and real estate equity funds, which recorded $244 million and $10 million in net outflows, respectively.
Of the $12.5 billion in equity fund inflows, $2.2 billion flowed into all-equity asset allocation ETFs, NBCM noted.
Among fixed-income ETFs, the Canadian corporate bond fund category led in monthly inflows, with $907 million gathered. The money-market, Canadian aggregate, sub-investment-grade and foreign bond fund categories saw substantial investor interest too, with each fund type attracting more than $300 million in inflows.
By maturity, the broad/mixed category dominated the month’s inflows with $1.2 billion in inflows. The money-market, ultra-short-term and short-term funds each recorded inflows north of $300 million. Mid-term bond funds were the least popular, drawing just $19 million in inflows.
Multi-asset ETFs recorded net inflows of $1.6 billion, while leveraged and inverse-leveraged funds drew $1 billion.
Commodities funds took in $107 million.
ESG ETFs “saw a slower month in July” compared to earlier this year, with $120 million in net inflows recorded. Also, the Invesco ESG Global Bond ETF (TSX: IWBE) was delisted in the month.
Meanwhile, crypto-asset ETFs were in the red, with $2 million in net outflows.
The month of July saw the introduction of 16 new ETFs across 10 providers, including two funds from Madison Investments Holdings, Inc., which is a fresh face in the Canadian ETF industry. “Listing activity was led by actively managed equity mandates alongside income-oriented equity ETFs employing covered call strategies,” the report said.
Net Canadian ETF assets under management (AUM) hit $894.1 billion at the end of July.
Fund delistings at a glance
With 1,991 ETFs listed in Canada and counting, the report also analyzed whether fund delistings are happening alongside fund launches.
“Although Canadian ETF delistings peaked in 2023, terminations have since eased and remain stable year to date in 2026, even as launches continue,” it said.
NBCM pointed out that low AUM, a longer operating history, poor performance and limited trading volume “may together indicate a higher likelihood of closure,” but ultimately, “no feature is conclusive on its own.”
It noted that most ETFs that close are terminated within four years of launch, “suggesting that issuers generally give new products time to gain traction before ultimately delisting those that fail to attract investors,” while older funds are more likely to be merged than delisted.
The report added that ETF closures don’t cause investors to lose their assets, although they may trigger tax consequences depending on the investor’s circumstances and how the investment is wound up.