Canadian ETFs had a rare month of negative net flows in June, as investors dumped Canadian equity ETFs, according to a new report from National Bank of Canada
ETF assets rose slightly in June to $157 billion, the report states, but net flows turned negative, with $434 million in net outflows for the month.
Large outflows from Canadian equity ETFs, about $1.4 billion worth, drove the overall negative net flow performance.
The outflow activity was concentrated at the industry’s dominant provider, iShares, which had more than $1.5 billion in net outflows during the month, according to the report.
Alongside the large outflows from Canadian equity funds, flows into U.S. and international equity ETFs also dipped in June compared to previous months. Emerging markets equity funds had net outflows of $24 million in June.
Fixed income ETFs generated positive monthly net flows, the report states, led by aggregate bond, Canada government, and preferred share products.
For the first half of 2018, the Canadian ETF industry recorded $10 billion in net flows, down $5.6 billion from the same period a year ago.
“A comparatively smaller inflow comes at no surprise since April was relatively weak on the back of March market sell-offs, and the outflow in June was driven by large redemptions from [iShares S&P/TSX 60 Index ETF] and [iShares Core S&P/TSX Capped Composite ETF], indicating diminished sentiment towards Canada,” the report states.
The international equity category led the way in the first half with $3.275 billion in net flows, followed by $2.7 billion in multi-asset funds, $2.5 billion in fixed-income funds, and $2.1 billion in U.S. equity funds. By contrast, Canadian equity ETFs recorded $584 million in net outflows for the first half.