Equity strategies led the way, bond inflows weakened, and investing trends that have defined 2020 took a breather
Equity strategies led Canada’s ETF space to a $1.7-billion inflow record as volatility crept up last month, according to the latest industry report from National Bank.
The dominant showing in equity ETFs, which saw net inflows of $1.2 billion in October, came as institutional-sized block creations were documented for a number of global and international equity ETFs; $455 million and $247 million flowed into Horizons’ HXEM and HXDM, respectively, giving them first and third top spots in terms of single long ETF inflows. U.S. Equity saw a net $123-million outflow, making it the sole equity ETF category by geography to see net redemptions.
Multi-factor ETFs, sector ETFs, and thematic equity categories experienced inflows notably into the CI WisdomTree U.S. Quality Dividend ETF DGR/B ($120 million), TD’s tech-focused TEC ($136 million), and its infrastructure-oriented TINF ($65 million), according to the report. TD’s Q Canadian Dividend ETF, which uses a quantitative approach to invest in dividend-paying equity securities and other income-producing instruments, took in $282 million.
ESG, disruptive technology, and quality strategies have proven to be key trends so far this year, though demand for those appeared to moderate last month with small and steady amounts of investor interest. Meanwhile, some low-volatility ETFs saw outflows, led by the $40 million in net redemptions from BMO’s ZLI.
Fixed-income ETF inflows weakened considerably in October, with just $279 million flowing in overall. The report showed a divergent trend between bond categories, with inflows into Canadian government bond (BMO’s ZFL attracted $104 million) and cash alternative ETFs (CI’s CSAV and Horizons’ HSAV took in $75 million and $108 million, respectively) somewhat offset by outflows from preferred shares (ZPR lost $106 million) and Canadian corporate-bond ETFs (iShares’ XCB shed $40 million).
“[I]nvestors may be feeling risk-averse heading into a potentially volatile period as earnings unfold and the U.S. presidential election plays out,” the report said.
Multi-asset ETFs, meanwhile, took in $193 million last month courtesy of perennially popular asset-allocation ETFs such as Vanguard’s VGRO ($44 million) along with certain market-neutral alternative ETFs. Commodities ETF inflows saw a further weakening, the report said, with gold bullion ETF inflows of nearly $40 million being a step down from previous months.
The report also made note of eight new Canadian ETFs launched in October, including:
- A leveraged Canadian bank-focused strategy from Hamilton Capital (HCAL);
- An active global growth equity ETF from Franklin Templeton (FGGE);
- Two active global ETFs from AGF (AGLB and AGSG);
- Three active fixed-income ETFs from CIBC (CPLS, CCRE, and CCNS); and
- An index ETF from Invesco that tracks the S&P/TSX Composite ESG index (ESGC)
