Equity ETFs accounted for most of the inflows amid strong demand to start 2022
Canadian exchange-traded funds (ETFs) were in demand as 2022 began with inflows for January totalling $5 billion.
The latest monthly stats from National Bank show that investors favoured equity ETFs with inflows of $4.6 billion (90% of the total) while fixed income accounted for $98 million (27%), pulling back from the previous month’s demand for safety assets.
Equity ETF investors poured $1.2bn into those focused on Canadian stocks, while US-focused funds attracted $2.1bn and $1.3 billion was invested in other international equities ETFs. The highest inflows were for market cap-weighted passive ETFs
National Bank economists noted a rotation from growth to value, with technology sector ETFs posting a rare month of outflows while financials and energy sector funds were in demand.
Hawkish tones from central banks are cited as drivers for demand in cash alternatives and short-term bond ETFs.
January also saw strong outflows for commodities - $187 million – as precious metal prices were rangebound and gold bullion ETFs led the redemptions.
With Bitcoin and Ethereum prices slumping during the month, cryptocurrency ETFs also saw a pull back with outflows of $68 million.
Record launches
Investor choice was enhanced in January as ETF providers launched 37 new funds, a record for a single month.
ESG was the theme of 19 of the new ETFs in both the equity and fixed income categories.
Leading the market in terms of net inflows were Horizons, Vanguard, and RBC iShares with $1.2bn, $991m, and $976m respectively. But outside the top 10 providers it was Hamilton, Scotiabank and Arrow Capital that saw the largest flows as percentage of starting assets.
RBC iShares remains the leader by AUM ($96.7bn) followed by BMO ($82.2bn), and Vanguard ($39.7bn). These three providers have a combined market share of more than 68%, with RBC iShares alone at 30.3%.
