Latest figures show total year-to-date flows top $32 billion as fixed-income holds steady and gold ETFs lose steam
Inflows into Canada-listed ETFs continued to decelerate in September as equity ETFs dipped into negative territory while fixed income held its ground, according to the latest industry report from National Bank.
Based on data from the bank and from Bloomberg, the report said Canadian ETFs imbibed $1.1 billion last month, a tame result after the industry saw inflows comfortably above $2 billion in August and a shade above $6 billion the month before that.
Equity ETFs experienced a mild outflow of $85 million in September as redemptions of $220 million and $114 million from Canada and US equity ETFs, respectively, were offset by inflows of $249 million into international stock ETFs.
“Profit-taking may have been at play among U.S. equity ETFs,” the report said, noting how higher volatility and declines in both the tech sector and U.S. market might have prompted some investors to lock in gains. “Meanwhile, in Canada, the S&P/TSX Composite Index has lagged the S&P 500 Index by 9% year-to-date.”
Low-volatility ETFs suffered redemptions, which the report attributed to activity akin to performance chasing among investors since the steep drop in markets during the first quarter. While most low-vol ETFs delivered smaller drawdowns during the actual selloff, they have on the whole been unable to catch up with broad market benchmarks since the market bottom, National Bank said.
Fixed-income ETFs took in $1 billion on the strength of inflows seen across corporate, government, and emerging-market bond ETFs as well as aggregate bond products. And as gold prices weakened from more than $2,000 per ounce in early August to $1,900 more recently, flows for gold bullion ETFs slowed down or reversed into outflows in September; gold equity ETFs saw their second straight month of outflows.
The Canadian space welcomed a new ETF provider in NCM Investments, which introduced an active ETF series of an existing mutual funds. September also saw a flurry of launches that ran the gamut of asset-allocation, fixed-income, thematic, international equity, and infrastructure funds.
National Bank also released a report on U.S.-listed ETF flows, which showed year-to-date inflows surpassing US$300 billion, just US$30 billion short of the full-year total for 2019.
Despite the ongoing U.S. stock-market volatility, the report said U.S.-domiciled equity ETFs continued to see strong inflows. Industrial ETFs topped the sector inflows table with US$1.9 billion in inflows, while technology stocks and financial stocks saw outflows of US$1.4 billion and $1.6 billion, respectively.
Given outflows from tech and growth ETFs coupled with inflows to value, National Bank said market sentiment may have reversed toward investors seeking stability to go along with upside in the recovery.
