Based on the Scotia ETF EDGE reports From October 30 to December 1, spanning a five-week period, Canadian ETFs saw an inflow of $6.1 billion, a rise of $3.2 billion from the previous month. The bulk of the increase came from equity with a substantial $3.5 billion in net creation of the month’s total inflows while fixed income and cash ETFs accounted for $1.4 billion and cryptocurrency for a respectable $0.8 billion.
On November 1, the Fed Chair Jerome Powell announced that it was not likely that the Federal Reserve would hike again. This statement seemingly bolstered investor confidence in November, as reflected in substantial inflows into equity ETFs. The market’s performance further supports this assertion, with the S&P/TSX and S&P 500 returning 9.1 per cent and 7.5 per cent, respectively during the month.
Over the last 11 months, Canadian ETFs accumulated about $36.3 billion in assets. Fixed-income ETFs (including cash ETFs) led the way with $20.3 billion in investments, followed by equity with $12.2 billion in inflows.
The iShares S&P/TSX 60 Index ETF (XIU-T) experienced the largest inflows at $0.9 billion, followed by the BMO S&P 500 Index ETF (ZSP-T) at $0.8 billion. This seems to indicate that investors are looking to balance risk and return in this uncertain environment.
Additions
November saw seven new ETFs launches in the Canadian market. Four of the seven products are from Mackenzie Investments.
Traditional Equity
The Guardian Canadian Focused Equity Fund (GCFE-T) focuses its investment portfolio on 15 to 20 Canadian companies characterized by high quality and appealing valuations.
The investment strategy of the Guardian International Equity Select Fund (GIES-T) emphasizes on a portfolio of 15 to 30 dividend-paying international equities to attain a stable, high level of income. The ETF applies a growth at a reasonable price approach with the flexibility to allocate up to 15 per cent of its market value to foreign equities with substantial business operations in Canada or listing on the TSX.
At the opposite of Guardian’s concentrated portfolios, for investors seeking greater diversification potential, Mackenzie All-Equity Allocation ETF (MEQT-T) offers a globally diversified portfolio built from 6 Mackenzie ETFs.
Traditional Fixed Income
Mackenzie Investments concentrated its new ETF solutions with some government bond exposure.
The Mackenzie Canadian Ultra Short Bond Index ETF (QASH-T) aims to offer limited duration exposure through investments in Canadian government or corporate bonds with maturities of less than one year.
The Mackenzie Canadian Government Long Bond Index ETF (QLB-T) seeks to reflect the performance of Canadian federal and provincial bonds with maturities of 15 years or longer. Mackenzie US Government Long Bond Index ETF (QTLT-T), its U.S. counterpart, seeks to similar objective, but for U.S. treasuries with a maturity greater than 20 years.
Alternative
Tralucent becomes the 41st active ETF provider in Canada. Headquartered in Toronto, Ontario, Tralucent Asset Management is a wealth management company offering portfolio management services to retail and institution clients since 2008.
The primary objective of the Tralucent Global Alt (Long/Short) Equity Fund (TGAF-T) is to achieve capital growth through a long-short strategy. The ETF aims to maintain a 100 per cent long position and a 40 per cent short position, resulting in a net exposure of 60 per cent, focusing on mid and large-cap global securities.
Anthony Ménard, CFA, is vice-president of data management at Inovestor.
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