Latest figures show mixed activity within bond space, along with continued focus on safety from gold
The Canadian ETF space took in $2.4 billion from investors last month, with the lion’s share coming from across-the-board inflows in the equity space.
According to the latest report from National Bank, equity ETFs collected $1.9bn in net inflows, with $1.1bn pouring into international equities. U.S. equity ETFs lured $628 million, and Canadian ETFs saw just $147 million trickle in.
Among international equity ETFs, quality, momentum, and low-vol factor ETFs saw a bump in popularity, while emerging-market ETFs shed assets over a renewal of Sino-U.S. trade tensions and escalating uncertainty around COVID-19 in certain developing countries.
Canadian equity inflows were marked by reinvigorated investor interest in financial and energy sectors, which both showed hints of stabilization and recovery. Demand for technology and material sectors remained robust after the selloff in March, while outflows from real-estate sector ETFs continued as coronavirus-induced lockdowns take their toll.
Within U.S. equity ETFs, tech-sector ETFs as well as those tracking the tech-heavy NASDAQ 100 saw healthy inflows amid the new normal of working from home. As reported by National Bank, U.S. technology-sector benchmarks have returned 39% since the market hit its March 23 bottom, marking the strongest recovery among all GICS sectors.
Fixed-income ETFs saw $189 million in net inflows, underpinned by mixed results across categories. Aggregate bonds netted $230 million, while cash-deposit ETFs saw $387 million in net inflows. Investment-grade corporate-bond ETFs saw more inflows than outflows, which contributed to a $429-mn net outflow from Canadian corporate-bond ETFs.
May was a winning month for commodity ETFs, whose assets grew 8% from net inflows of $110 million for the month. That was dominated by continued inflows into gold bullion ETFs, which combined with gold equity ETF inflows to mark the third-largest inflow into ETFs with gold exposure in Canadian history.
The inflows point to persistent demand for gold among investors, whether as a safe-haven asset or as an inflation hedge. As noted by National Bank, gold bullion has outperformed the S&P 500 index since the start of 2019; gold miners have done even better, outperforming the index by 28% over that period.
