Canadian ETFs: Canadian Fixed Income Continue to Dominate Inflow, Ten New Launches Include Dividend and Money Market ETFs

Canadian ETFs: Canadian Fixed Income Continue to Dominate Inflow, Ten New Launches Include Dividend and Money Market ETFs

In April, Canadian Fixed Income ETFs experienced a substantial inflow of $2 billion, with approximately $1.1 billion directed towards Money Market ETFs, as reported by National Bank Financial Markets. Given the current financial climate and prevailing uncertainty, it is not surprising that around $0.3 billion flowed out of equity ETFs in the US and Canada, primarily moving towards Fixed Income investments, particularly in money market ETFs and Canadian government bonds. This shift in investment strategy reflects an effort to navigate through these challenging times.

Canadian ETFs in April experienced a significant decline in inflow compared to the previous month, dropping from $7 billion to $2 billion while Canadian equity ETFs saw the largest outflow, totaling $0.8 billion. On the other hand, international equity markets continued to witness demand, resulting in a net inflow of nearly $1 billion, half of the month’s inflow.

According to FactSet, as of April 28th, 53 per cent of companies listed in the S&P 500 had reported their earnings. Out of those, 79 per cent exceeded earnings expectations, and 74 per cent surpassed sales expectations. Despite these positive figures, investors remained cautious due to ongoing analysis of the repercussions of bank failures in the United States. Consequently, they favored international and emerging market stocks, perceiving them as posing lower risk and/or offering better value.

April witnessed the introduction of ten new ETFs:

HRIF, TBNK, and TUEX focus on stable companies that pay dividends, with HRIF additionally employing a covered call strategy to enhance monthly yields. TUEX is a hedged structure of the TD Active U.S. Enhanced Dividend ETF (TUED-T)

UBIL-U, CBIL, and MNU-U ETFs concentrate on short-term investments in money market instruments, such as treasury bills with maturities of less than three months, backed by their respective governments. Providers may have been motivated to launch these ETFs due to the bank runs experienced by some US banks. Investors may have opted to invest in money market funds rather than keeping their funds in bank deposits.

HEB, TECX, and TRVI ETFs specialize in equity investments within specific sectors or thematic areas. TRVI, in addition to its focus on a particular sector, implements a covered call strategy to enhance income yield. TECX is a hedged structure of the TD Global Technology Leaders Index ETF (TEC-T). On the other hand, MCKG aims to capture the potential of global stocks with sustainable business models.

Several Invesco ETFs were delisted in April. According to Invesco, “the objective of this initiative is to simplify the firm’s product offerings to enable it to sharpen the focus on areas of highest client demand.”

HEB-T Hamilton Canadian Bank Equal-Weight Index ETF Equity Financials Medium 4/3/2023 0.19%
HRIF-T Harvest Diversified Equity Income ETF Equity Covered Call Medium 4/11/2023 0.00%**
TRVI-T Harvest Travel & Leisure Income ETF  Equity Consumer Discretionary High 4/11/2023 0.75%
CBIL-T Horizons 0-3 Month T-Bill ETF  Fixed Income Government Bonds, Short-term Low 4/12/2023 0.10%
UBIL-U-T Horizons 0-3 Month U.S. T-Bill ETF  Fixed Income Government Bonds, Short-term Low 4/12/2023 0.12%
MCKG-NE Mackenzie Corporate Knights Global 100 Index ETF Equity Global, ESG Medium 4/18/2023 0.50%
TBNK-T TD Canadian Bank Dividend Index ETF Equity Financials, Dividend  Medium 4/24/2023 0.25%
TECX-T* TD Global Technology Leaders CAD Hedged Index ETF Equity Global, Technology Medium to High 4/24/2023 0.35%
TUEX-T* TD Active U.S. Enhanced Dividend CAD Hedged ETF Equity Dividend  Medium 4/24/2023 0.65%
MNU-U-T Purpose USD Cash Management Fund Fixed Income Corporate Bonds, Short-term Low 4/24/2023 0.20%

PPS Invesco Canadian Preferred Share Index ETF Equity Prefered Shares Medium 4/17/2023 0.45%
PZC Invesco FTSE RAFI Canadian Small-Mid Index ETF Equity Small and Mid Cap Medium to High 4/17/2023 0.60%
PXG,PXG.U Invesco FTSE RAFI Global+ Index ETF Equity Global, Small Cap Medium 4/17/2023 0.50%
PSY, PSY.U Invesco Global Shareholder Yield ETF Equity Global, Dividend Medium 4/17/2023 0.75%
USB, USB.U Invesco LadderRite U.S. 0-5 Year Corporate Bond Index ETF Fixed Income Corporate Bonds Low to Medium 4/17/2023 0.25%
REIT Invesco S&P/TSX REIT Income Index ETF Real Estate   Medium 4/17/2023 0.45%
ELV Invesco S&P Emerging Markets Low Volatility Index ETF Equity Low Volatility Medium 4/17/2023 0.34%
ILV, ILV.F Invesco S&P Internationally Developed Low Volatility Index ETF Equity Low Volatility Low to Medium 4/17/2023 0.40%
BKL.C, BKL.F, BKL.U Invesco Senior Loan Index ETF Fixed Income High Yield Low 4/17/2023 0.72%

Anthony Ménard, CFA, is vice-president of data management at Inovestor.

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