Based on the Scotia ETF EDGE reports from September 30 to November 1, spanning a five-week period, Canadian ETFs saw an inflow of $10.4 billion. Equity flows edged out fixed income with $5.9 billion while $4.3 billion went to fixed income compared to last month’s position jostling. Cash made a run from the markets as $0.3 billion was withdrawn. Crypto found some renewed bullishness with inflows of $0.27 billion, recovering from last month’s retreat.
For the second month in a row, the Bank of Canada has decided to cut its key rate only this time with a large 50 basis points reduction. The European Central Bank also cut its interest rate by 25 basis points in its continued attempt to boost business activity.
The fourth quarter started off with a volatile month for the market, likely spurred by mixed Q3 earnings results. The uncertainly of the U.S. election and its implications on geopolitical outcomes was also a contributing factor. On the commodities side, crude oil prices spiked briefly amid the Mideast conflict that could disrupt global oil supplies. Crypto-tied stocks saw gains as bitcoin jumped to around US$66,000 price levels. Despite the Dow hitting a record of 43,000 along with Nvidia and other tech stocks surging, stocks still lost ground by the end of the month with the DJIA and S&P 500 each declining by 1%.
Cl Canadian Aggregate Bond Index ETF (CAGG-T) raked in a whopping $1.07 billion in inflows for October alone. BMO Equal Weight Banks Index ETF (ZEB-T) attracted $0.67 billion. The Vanguard S&P 500 Index ETF (VFV-T) continues to rank as one of the most sought-after funds with $0.56 billion in new capital. TD Canadian Long Term Federal Bond ETF (TCLB-T) and iShares Core S&P/TSX Capped Composite Index ETF (XIC-T) experienced the highest outflows with $0.30 billion and $0.23 billion leaving the funds, respectively. Investors appears to take advantage of declining yields as they favoured the fixed income sectors for their portfolios.
Additions
In October, 14 new ETFs were made available to the Canadian market with two new issuers to choose from.
J.P. Morgan Asset Management expanded its business in Canada by listing two active ETFs on the Toronto Stock Exchange, namely JP Morgan US Equity Premium Income Active ETF (JEPI-T) and JP Morgan Nasdaq Equity Premium Income Active ETF (JEPQ-T). The two equity-focused ETFs provide Canadian investors exposure to U.S. stocks that track broad market indices, specifically the S&P 500 for JEPI and the Nasdaq-100 Index for JEPQ. Both funds are designed with the objective of providing a steady stream of income through high-quality equity investments coupled with covered call strategies. The premiums collected from selling call options serves as an additional source of income in combination with the dividends from the underlying stock portfolio.
Capital International Asset Management (Canada), Inc. becomes another player to join the Canadian ETF market by launching its initial offering with four funds, two equity and two fixed income strategies.
Capital Group Global Equity Select ETFTM (Canada) (CAPG-T) invests primarily in common stocks on a global basis with flexibility to use fixed-income securities and cash equivalents during market volatility, while tracking the MSCI All Country World Index (ACWI) (CAD).
Capital Group International Equity Select ETFTM (Canada) (CAPI-T) invests in large cap companies outside of North America while also tracking the MSCI All Country World Index (ACWI) ex USA (CAD).
Capital Group World Bond Select ETFTM (Canada) (CAPW-T) invests primarily in bonds and other debt securities of global issuers. The fund may invest up to 25% of its assets at time purchase in lower rated, higher yielding debt securities rated BB/Ba and below. It may use derivatives for liquidity, risk management, currency exposure, interest rate sensitivity, and to increase total return.
Capital Group Multi-Sector Income Select ETFTM (Canada) (CAPM-T) seeks to provide a high level of current income through investments primarily in a broad range of bonds and other debt securities.
Dynamic Funds added two new active fixed income ETFs. Dynamic Active Bond ETF (DXBB-T) invests in a diversified portfolio of North American government and corporate fixed income securities, while Dynamic Active Corporate Bond ETF (DXCB-T) invests in a diversified portfolio of investment-grade corporate fixed income securities.
Manulife launched two new ETFs on Cboe Canada. Manulife Alternative Opportunities Funds (OPPS-NE) invests in Canadian and U.S. investment-grade corporate and high yield fixed income securities. Manulife Strategic Income Plus Fund (PLUS-NE) invests in government and corporate debt securities from developed and emerging markets, including investment-grade bonds, high yield bonds, loans and securitized debt, as well as in current investments.
Starlight Capital launched the Starlight Dividend Growth Class ETF (SCDG-NE). The fund invests primarily in equity securities of Canadian companies that demonstrate financial strength and good growth potential, with the objective of providing a regular current income.
BMO MSCI EAFE High Quality Index ETF (ZIQ-T) seeks to track the MSCI EAFE Quality Index, investing in large and mid-cap companies outside Canada and the US with high ROE, stable earnings, and low leverage. It may use a sampling approach to replicate the index.
Guardian Capital added two ETF versions of existing mutual funds to Cboe Canada. The Guardian Strategic Income Fund (GSIF-NE) seeks to offer high monthly income through a combination of equity and traditional fixed income securities with the aim of risk mitigation and capital preservation. The Guardian i3 International Quality Growth Fund (GIQI-NE) seeks to achieve growth of capital through diversified investments in companies outside of North America, focusing on mid- to large-cap well-established companies in their industries.
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
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