Investors continued to pour their money into equity ETFs in April, despite the market volatility and economic uncertainty driven by the ongoing global trade war, a report from National Bank Financial Inc. shows.
Equity ETFs accounted for $5 billion of the total $7.3 billion inflows recorded for the month. While this was a slowdown for total ETF inflows from the previous record-breaking month, April had the highest single-day and weekly trading volume in Canadian ETF history, the May 2 report noted.
Most of the equity inflows went to international equity ETFs, which reported $3 billion in creations. Meanwhile, U.S. equity ETFs gathered $1.5 billion and Canadian equity ETFs took in $577 million.
“Equity ETF inflows remained very strong in April despite significant market volatility globally trigged by the trade war and associated economic uncertainty,” the report said.
Low volatility ETFs, which aim to achieve reduced volatility by screening for low volatility stocks, low beta stocks and/or minimizing portfolio volatility, were also popular in April. They recorded inflows amounting to nearly $1.8 billion.
Sector-based ETFs, meanwhile, reported $854 million in redemptions, primarily due to outflows in financials and technology sector ETFs.
Fixed-income ETFs recorded a sharp decline in inflows in April as many of its sub-categories “suffered outflows during a surprising bond selloff,” the report said. They gathered $922 million in the month, down from $6.3 million a month prior.
Money-market funds, Canadian corporate bond funds, U.S./North American bond funds and sub-investment grade bond funds were all in positive territory, gathering $854 million, $730 million, $357 million and $108 million, respectively.
Those inflows were partially offset by Canadian government bond funds, foreign bond funds, preferred/convertible bond funds and Canadian aggregate bond funds. Their redemptions amounted to $738 million, $226 million, $141 million and $23 million, respectively.
Multi-asset ETFs enjoyed inflows of $561 million, followed by inverse/levered ETFs at $417 million and commodities ETFs at $219 million.
Cryptoasset ETFs recorded $106 million in inflows, the bulk of which went to a new spot Solana ETF from 3iQ Corp.
ESG ETFs reported $92 million in redemptions, breaking a three-month inflow streak for the asset class.
Fund launches
April was a busy month in terms of fund launches — 37 new products hit the market, bringing the total number of ETFs in Canada to 1,589.
Among the launches were new thematic and sector ETFs from Global X Investments Canada Inc., target-maturity bond ETFs from RBC iShares, credit-loan obligation ETFs from Mackenzie Investments, BMO Asset Management Inc. and Brompton Funds Ltd., as well as four spot Solana ETFs from four different fund managers that began trading on the same day.
The report also said that of the 44 fund providers in Canada, several lost assets in April, including CI Global Asset Management, TD Asset Management Inc., National Bank Investments Inc., Scotia Global Asset Management and AGF Investments Inc. Meanwhile, others “picked up significant inflows,” such as CIBC Asset Management Inc. and 3iQ Corp.
Year-to-date inflows by the end of April reached “a whopping” $39 billion, surpassing pre-Covid-19 figures for inflows reported by this time of year, National Bank Financial reported.