The Canadian ETF industry reached new heights in 2017, finishing the year with inflows of $26 billion, the highest ever in its history, and a 56% increase over the previous annual record set in 2016.
That’s according to a recent strategy note from National Bank Financial Inc.
Economic expansion across the globe laid the groundwork for broad-based market increases, enticing investors who flock to ETFs to access different corners on the market, the NBF report says. The banner year of inflows brought total ETF assets under management in Canada to $147 billion.
The industry also welcomed a record 11 new providers, and witnessed the launch of 169 new products — another record.
New ETF launches were up 70% compared with 2016. In terms of fund inflows, “new ETFs contributed a significant 22% to annual flows while existing products took up the remaining 78%,” the report says.
The industry embraced innovation in 2017. The report highlights the launch of two ETFs from Toronto-based Horizons ETFs Management (Canada) Inc.: Marijuana Life Sciences ETF and Horizons Active A.I. Global Equity ETF. As well, Evolve Funds Group Inc. and Purpose Investments Inc., both based in Toronto, each filed prospectuses for bitcoin ETFs, which plan to offer exposure to the cryptocurrency’s performance though CBOE bitcoin futures, the report says.
Active ETFs saw renewed activity in 2017, according to the report, especially on the fixed income side. “Among fixed income ETFs, active products captured 41% of the inflows, considerably above their 19% share of total fixed income ETF assets,” the report says.
While a record number of new providers came to the Canadian ETF market in 2017, the industry also witnessed some consolidation. “In November, Evolve Funds announced acquisition of Sphere’s ETFs with the changes expected to be implemented in January 2018,” the report says. “Additionally, WisdomTree Canada acquired the Questrade ETFs, and the deal was finalized in December 2017.”