Much-hyped category limps in last
A 7.5% quarterly increase brought the Canadian ETF market's peak assets at the end of the first quarter of 2023 to $365 billion, according to the latest Canadian ETF Association commentary.
In comparison to the last quarter of 2022, the first quarter's net creations came to $12.3 billion. The biggest monthly net creations to far for Canadian ETFs were $7.5 billion in March 2023, the month with the highest sales volume.
With $4.9 billion in net creations, equity ETFs, the biggest ETF category, were the best-selling asset class in the first quarter of 2023. Sector stock mandates took the top spot with $1.9 billion, followed by foreign equities ($1.8 billion), Canadian equity ETFs ($1.0 billion), and sector equity mandates ($1.8 billion). High demand was seen in the financial and healthcare sectors, with overseas equities coming in second with $1.8 billion.
Fixed income finished the quarter with $3.5 billion in net creations, while money market funds came in second with $3.6 billion created over the course of the three months. High-yield bond funds contributed another $197 million to the total, with investment grade bond ETFs accounting for the majority of the category's $3.4 billion in net creations.
$480 million in net creations for multi-asset class ETFs finished the first quarter. With $513 million redeemed throughout the quarter, cryptocurrency ETFs came in last place. The product category had considerable net redemptions of $665 million in the months that followed the product category's rise to net creations of $152 million in January.
NBI Global Real Assets Income ETF, sponsored by National Bank, became the best-selling company for the quarter with net creations of $2.3 billion. Horizon ETFs came in second with $2.1 billion in sales, while BMO Asset Management completed the top three with $2.0 billion.
Over the course of the first quarter, 25 new ETFs were introduced, the majority of which took place in March. In contrast to the other 15 passive ETFs, 10 of the 25 products were actively managed funds. With 16 funds established during the season, the preference for the asset class leaned largely toward stock mandates. The other nine ETFs were focused on fixed-income investments.
A significant portion of the funds that were established in the previous year focus on various income possibilities in the stock and fixed income markets. Many product developments over the past few months have been centred on strategies that generate extra revenue by selling covered calls on a portion of the underlying portfolio of assets.
