In February, Canadian ETFs experienced inflows of $4B following a negligible outflow in January. Fixed Income ETFs received 65 per cent of it at $2.6B, while Equity ETFs received almost $1B in inflows, or 25 per cent of the pie, across all regions according to National Bank Financial Markets.
Canada received most of the equity inflow at $0.6B, representing roughly 60 per cent of this month’s equity inflow. In the fixed income segment, cash alternatives were the preferred choice, with an inflow of $1.4 billion, representing approximately half of the fixed income category.
In February, excluding multiple classes, eleven ETFs were launched and nine are new strategies (excluding multiple classes and hedged version of an existing ETF). Six of those are related to long-term bonds or ESG dividend aristocrats.
Long-term bonds have experienced a significant increase in yield in the last two years. As such, they may be worth considering as a potential addition to an equity portfolio for protection against a market downturn. This is particularly relevant given the ongoing uncertainty surrounding the bankruptcy of Silicon Valley Bank.
- Blackrock introduced four new strategies, two of which focus on long-term bonds, one investing in Canada (XFLB-T/XTLH-T) and the other in the U.S. (XTLT-T). They also recognized the growing demand for emerging market portfolios that exclude China due to the country’s unique governance regime (XEMC). Moreover, Blackrock further responded to the trend of electric and autonomous vehicles by launching XDRV-T.
- Invesco expanded its ESG offerings by unveiling three new ETFs with a dividend aristocrat theme, which are companies that have consistently distributed and increased their dividends for several years without interruption. The ETFs are designed for Canadian (ICAE-T), US (IUAE-T), and international (IIAE-T) stocks.
- Mulvihill continued to target option-related strategies with XLVE-T which uses 25 per cent leverage to purchase additional shares for the purpose of writing options while CI Global Asset Management launched CUTL-T, a covered call strategy on North American Utilities.
- CIBC has introduced CIEH-T, a hedged version of CIEI-T which invests in international equities.
Since Inovestor began covering ETFs in 2015, Blackrock has maintained its position as the leading provider in terms of assets under management, with $93.5B, accounting for a significant 28.5% share of Canada’s $328 billion ETF market. Additionally, based on our database, Blackrock is currently the largest provider in terms of ETFs excluding multiple classes with 150. Their website presents 166 ETFs, which include multiple classes.
In Canada, Invesco has been actively promoting their ESG ETFs for a while now. Our database shows that all of their 10 most recent ETFs (excluding potential deletions) since 2021 have been classified as ESG products. Invesco’s website reveals that they have 45 ETFs in CAD (excluding hedged ETFs), out of which we recognize 13 as ESG products. This indicates that about 30% of their ETF offerings are ESG-related.
*Hedged structure of an existing strategy
Anthony Ménard, CFA, is vice-president of data management at Inovestor.
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