Based on the Scotia ETF EDGE reports from September 2 to September 27, spanning a four-week period, Canadian ETFs saw an inflow of $6.1 billion, a decline of $3.04 billion from the previous month. Equity and fixed income ETFs shared near equal attention from investors with $2.9 billion going to equity and $2.4 billion for fixed income. Cash rebounded with inflows of $0.31 billion, a stark contrast to last month’s cash exodus of $0.45 billion, reflecting strategic repositioning among investors amid evolving market dynamics.
September was a month of central banks slashing interest rates. The Bank of Canada kicked it off by cutting its overnight rate for a third time this year.
The European Central Bank soon followed with its own quarter point rate cut to 3.5% as they cited cooling inflation among other economic indicators. The Federal Reserve finally lowered its key rate by a half percentage point, or 50 basis points, also pointing to moderating inflation, which gave the committee “greater confidence that inflation is moving sustainably toward 2 percent.” Chair Powell’s announcement provided a jolt to the U.S stock market. Wall Street concluded September and the third quarter on a winning note. The three major averages, the S&P 500, DJIA, and Nasdaq, ended with a monthly gain.
The Cl Global Short-Term Bond Fund ETF (CGSB-T) experienced the highest influx with $0.37 billion, followed by BMO Long Federal Bond Index ETF (ZFL-T), which attracted $0.33 billion. The Vanguard S&P 500 Index ETF (VFV-T) trailed slightly with $0.32 billion flowing in. Cl Enhanced Short Duration Bond Fund ETF (FSB-T) had the largest capital run with $0.37 billion. The BMO S&P 500 Index ETF (ZSP-T) and BMO Aggregate Bond Index ETF (ZAG-T) each had an outflow of $0.17 billion. It appears that equity and fixed income ETFs are jostling for position in portfolios.
Additions
In September, 23 new ETFs made their way into the Canadian market.
Dynamic Funds released U.S. versions to three funds from its Active ETF series.
Dynamic Active Global Dividend ETF (DXG-U-T) invests in equity securities of global businesses that pay or are expected to pay a dividend or distribution while tracking the MSCI World Index (C$). Dynamic Active U.S. Dividend ETF (DXU-U-T) focuses on large-cap companies that are expected to initiate or grow their dividends. Dynamic Active U.S. Equity ETF (DXUS-U-T) invests in high-quality U.S. growth companies that lead their respective industries.
Meanwhile, Mackenzie Investments broadened its offerings with the launch of four ETFs. Mackenzie Bluewater Next Gen Growth ETF (MNXT-T) primarily invests in established, global and profitable businesses that have been identified as having the potential to be drivers of innovation. Mackenzie International Equity ETF (MIQE-T) and Mackenzie Global Equity ETF (MGQE-T) provides exposure to investments outside of North America. Mackenzie Core Resources ETF (MORE-T) offers investors an active strategy portfolio that concentrates on the energy, materials and precious metals industries.
Evolve Canadian Utilities Enhanced Yield Index Fund (UTES-T) and Evolve Canadian Aggregate Bond Enhanced Yield Fund (AGG-T) both employ an active covered call strategy to generate an attractive monthly income.
Other ETF Launches
RBC iShares launched two new ETF Series of RBC Funds which are managed by RBC Global Asset Management on Cboe Canada. RBC Life Science and Technology Fund – ETF Series (RLST-NE) invests in equity securities of U.S. companies whose businesses relate to life sciences and technology. RBC U.S. Mid-Cap Growth Equity Fund – ETF Series (RUMG-NE) invests in equity securities of U.S. mid-cap companies.
RBC iShares also expanded access to BlackRock’s platform with the launch of iShares Flexible Monthly Income ETF (XFLI-T, XLFI-U-T), which invests in the BlackRock Flexible Income ETF (BINC-ARCA) and managed by BlackRock Asset Management Canada Limited.
FT Portfolios Canada Co. launched the First Trust SMID Cap Rising Dividend Achievers ETF (SDVY-NE, SDVY-F-NE) on Cboe Canada. The ETF seeks to track the performance of the Nasdaq US Small Mid Cap Rising Dividend AchieversTM Index.
Forstrong Global Balanced ETF (FGBL-T) is a multi-asset ETF that directly and indirectly invests in a diversified mix of global and Canadian securities.
CI Global Quality Dividend Growth Index ETF (CGQD-T) provides exposure to dividend-paying companies with growth and quality characteristics around the developed world.
Vanguard Canadian Ultra-Short Government Bond Index ETF (VVSG-T) is a low-risk fixed income solution for investors with a savings goal of a year of less. The fund invests entirely in high-quality Government of Canada bills and bonds, offers favourable yields and daily liquidity, and is one of the lowest-cost, short-term investment products in the market with a management fee of 0.10%.
Hamilton U.S. T-Bill YIELD MAXIMIZER ETF (HBIL-T, HBIL-U-T) utilizes an active covered call strategy to deliver attractive monthly income while providing exposure to shorter-term U.S. Treasury securities.
Corton Capital Inc., a new ETF provider, introduced itself to the ETF continuum with the Corton Enhanced Income Fund (RAAA-T), which invests in a diversified portfolio of European and U.S. floating rate collateralized loan obligations.
Fidelity Equity Premium Yield ETF (FEPY-NE, FEPY-U-NE) offers exposure to an equity and options-based investment strategy that can generate potentially higher levels of cash flow compared to equity-only strategies.
Amy Mak is senior financial analyst at Inovestor
At Inovestor, we believe that investors deserve access to the best financial information available. Leveraging our suite of award-winning research technologies, we go above and beyond to put that information at your fingertips. For more information, please visit inovestor.com
Editor’s note: An earlier version had listed ETF terminations for August instead of September
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.