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Canadian ETFs: Largest monthly inflow ever for cash alternatives; 30 new products launched in September

By October 18, 2022 No Comments

Canadian ETFs added $1.9 billion in new money in September, led by creations in the fixed income category. Equity ETFs saw $436 million in outflows, primarily due to redemptions in broad Canadian equity. Among the equity asset class, dividend/income strategies had $156 million of inflows. Sectors ETFS, such as health care, utilities, energy and financials also had net positive flows during the month.

Cash continues to be king, as cash alternative ETFs saw the highest inflows among the fixed income categories, with $1.6 billion in net inflows during the month of September – the highest monthly inflow ever for this category. CI High Interest Savings ETF (CSAV-T) and Purpose High Interest Savings ETF (PSA-T) remain the most popular ETFs in the category. Ultra-short-term bonds, which also exhibit minimal duration risk, recorded inflows during the month.

Cryptocurrency ETFs faced $81 million in outflows in September, led by 3iQ Coinshares Ether ETF (ETHQ-T).

After a relatively quiet few months, Canadian ETF providers ended the third quarter by introducing 30 new products. The lnewest offerings include the CI Auspice Brod Commodity ETF (CCOM-T). The fund provides exposure to a portfolio of commodity futures contracts across the energy, metals and agricultural sectors. Commodities historically exhibit low correlation to other asset classes and can provide diversification to a typical stock/bond portfolio. In order to minimize volatility and drawdowns, the ETF combines tactical exposure to 12 different commodities that can be long or flat, dynamic risk management and contract roll optimization. The ETF has a Low to Medium risk level, and charges a management fee of 0.52%.

Purpose Investments expanded their cash solutions lineup with the launch of the Purpose Cash Management Fund (MNY-T). The fund is designed to provide investors with a way to capitalize off rising interest rates, while also maintaining daily liquidity. The fund will invest in a diversified portfolio of high-quality Canadian money market instruments and has an anticipated yield of 3.30%. Cash alternative ETFs can be a great way to maximize the return on your cash balance without the lock-up features of guaranteed investment certificates. The ETF series of the fund trades on the TSX and charges a management fee of 0.20%.

Emerge Canada Inc. launched a new suite of actively managed sustainable equity ETFs. The Emerge EMPWR funds are structured as multi-manager funds and aim to showcase the talent of an all-women portfolio management team. Lisa Langley, President and CEO of Emerge, explains that they launched the EMPWR program to “support and advocate for female managers and inspire new women portfolio managers to join the industry”. These new funds invest primarily in global equities with a focus on ESG and sustainability. The EMPWR program uses a proprietary sustainability ranking system to evaluate the portfolios of their sub-advisors, both at the aggregate level, as well as on an individual security basis. The five new ETFs (as well as their identical USD versions) trade on the NEO exchange and charge a management fee of 0.80%.

Building on the success of the Fidelity Advantage Bitcoin ETF, Fidelity Investments Canada completed the launch of the Fidelity Advantage Ether ETF (FETH-T), providing investors with exposure to ether. Fidelity Clearing Canada will serve as the custodian of the fund, offering the ETF access to the trading and custody of ether in a secure way. The ETF charges a management fee of 0.40%, and an MER capped at 0.95%.

The other releases this month included covered call sector strategies, leveraged Canadian bank products, short-term active fixed income and a target date fund. Twelve different providers participated in launching new ETFs this month, and there were no terminations in September.