Canadian ETFs had inflows of more than $2.5 billion in February despite the market sell-off earlier in the month. As a result, Canadian ETF assets under management now stand at $150 billion, according to a new report from National Bank Financial Inc. in Toronto.Inflows into ETFs were more than $2.5 billion in February and year-to-date inflows are slightly outpacing the same period from 2017
Inflows into Canadian ETFs mainly came from iShares S&P/TSX 60 Index ETF, sponsored by BlackRock Canada Asset Management Ltd.’s iShares division. The ETF brought in $571 million during the month. This was supplemented by index-tracking broad market ETFs, sectoral ETFs (Canadian and U.S. financials) and low-volatility ETFs.
Inflows into U.S. equity reached $346 million, particularly into currency-unhedged U.S. products as the U.S. dollar strengthened relative to loonie. International equity ETFs saw inflows across all regions, spread among EAFE, emerging market and global ETFs.
Inflows into bonds inflows were mild in February. This was in contrast to previous months, when fixed-income ETFs were attracting consistently large inflows.
Vanguard Investments Canada Inc. had a strong month thanks to inflows of $234 million into Vanguard Aggregate Bond ETF, as the ETF’s management fee was recently cut to eight basis points (bps) from 12 bps. Vanguard also launched a suite of low-cost asset-allocation ETFs for different risk profiles, including Vanguard Growth ETF Portfolio, which attracted close to $70 million in inflows.
The top outflows in February were primarily in the fixed-income asset class, sparked by inflation and interest rate fears. Outflows were spread along the maturity and credit spectrum, except for floating-rate ETFs, which received inflows in response to short-term interest rates moving higher at the beginning of the year.
Canadian ETF inflows did not encounter any obstacles from the market sell-off that took place in early February. In fact, year-to-date inflows are slightly outpacing the same period from 2017.
Inflows into Canada’s top three providers — iShares, BMO Global Asset Management Inc. and Vanguard — accounted for half of the total, but new entrants are gaining traction. Of particular note, investors are still very interested in marijuana ETFs.
February was an active month for ETF launches as there were 18 ETFs introduced in the month with one new ETF provider — Bristol Gate Capital Partners Inc. — coming on board with the introduction of two new ETFs.