The Canadian ETF industry had net inflows of $716 million in September despite investors exiting from Canadian equity, according to a report from Montreal-based National Bank of Canada published this week.
Equity ETFs recorded a small outflow of $27 million in September, as investors collectively made a switch from Canadian to U.S. equity. Canadian ETFs had outflows of $324 million, while U.S. ETFs swallowed inflows of $208 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.
Specifically, ETFs representing the biggest segments of the Canadian market — financial and energy — saw outflows.
In contrast, fixed-income inflows were healthy and broad-based across almost all product categories. September’s net inflows of $652 million were on par with inflows for the past few months.
Overall fixed-income flows were bolstered, says the report, by preferred share ETFs and some shorter-term focused products.
Evolve Active Canadian Preferred Share ETF (DIVS) and BMO Laddered Preferred Share Index ETF (ZPR) both appear in the report’s top 15 inflows for the month.
Three Toronto-based firms entered the ETF market since National Bank’s August report: Fidelity Investments Canada ULC and Coin Capital Investment Management Inc. each launched ETFs in September, and Starlight Investments Capital LP’s first ETFs began trading on Oct. 2.
Among established players, Desjardins Global Asset Management Inc. launched six new “low CO2” ETFs and RBC Global Asset Management Inc. added two years to its target maturity lineup.
ETF assets in Canada have grown 10% by flows to $14.5 billion in 2018, the report says, with a quarter of the year still to go.