Financial sector ETFs saw strong interest despite fears of contagion from the US regional banking crisis; but cryptos and gold faced pullbacks
Last month was a big one for Canadian exchange-traded funds (ETFs) with a whopping $7 billion of inflows recorded.
A new report from National Bank of Canada reveals that fixed income ETFs accounted for almost half of the inflows at $3.3 billion, led by long term bonds, aggregate bonds and money market categories.
But it was equity ETFs that saw the largest share of inflows at $3.7 billion with International and Canadian equity funds favoured with $2.5 billion and $1.8 billion respectively. US equity funds posted withdrawals of more than half a billion.
Financial sector ETFs attracted $1.4 billion of inflows and came mostly after the news broke about the collapse of US regional lender Silicon Valley Bank.
Investors appear to have sought out financial sector investments without high exposure to regional banks while others will have seen a buying opportunity amid the burgeoning crisis.
There was also $1 billion created in the real estate sector, attributed to an institutional investor’s single block creation. This contributed the lion’s share of $1.4 billion inflows for Thematic equity. Low volatility ETFs lost equity in March.
Within fixed income ETFs, there were continued strong inflows for cash-like Money Market funds, attracting $854 million, while Canadian aggregate bond ETFs gained $976 million. Sub-investment grade bond and preferred share ETFs were out of favour last month.
Crypto and commodities lose out
There were notable withdrawals from both cryptocurrency and commodity ETFs.
For cryptos, despite more favourable prices for Bitcoin, outflows accelerated to $287 million, while commodity ETFs saw $34 million redeemed despite gold prices nearing $2,000 per ounce.
Although most providers saw inflows, AGF and 3iQ suffered outflows along with NCM Investments which is exiting the ETF space in May and announced a planned liquidation of its only ETF on the shelf.
RBC iShares, which leads the Canadian ETF market by market share (28%) ahead of BMO (25%) and Vanguard (13%), launched a suite of eight actively managed ETF series of existing mutual funds.
