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After a solid net creation in December, the Canadian ETF market recorded a net redemption of $343 million in January. $501 million of the outflow belonged to the fixed income asset class; equity ETFs accounted for $328 million of the outflow, with most of the positive flow coming from cash alternatives, according to National Bank Financial Markets. However, the robust demand for cash alternatives has moderated compared to previous months.

The three largest providers by asset under management (AUM), Blackrock, BMO, and Vanguard, saw more than $2.1 billion in outflow, although the rise in both stocks and bonds in January likely offset the loss in assets under management. The top three largest single ETF inflows for the month all belonged to fixed income: CI High Interest Savings ETF (CSAV-T), TD Canadian Aggregate Bond Index ETF (TDB-T) and BMO High Yield US Corporate CAD Hedged ETF (ZHY-T).

In January, excluding multiple classes, 13 ETFs were launched. From these 13, seven are covered call strategies, thus more than half of the new ETFs are related to this subcategory. With higher interest rates and volatility compared to the pre-COVID era, the covered call strategy presents an improved environment to deliver sound risk-adjusted returns and ETF providers are capturing what seems to be an attractive opportunity.

· BMO launched five new ETFs ranging from bonds (ZUAG-T / TIPS-T), agriculture (ZEAT-T) and covered call strategies (ZWHC-T / ZWEN-T). They also launched a new class for their BMO growth ETF (ZGRO-T-T) providing a fixed cash flow of 6% through monthly distributions.

· CIBC focused on the fixed income market with their Canadian Short Term Bond Index ETF (CSBI-T) and also launched a new hedged ETF based on their CIBC U.S. Equity Index ETF (CUEI-T). Their equity ETFs offer the lowest management fee of our database for an U.S. strategy.

· CI Financial targeted downside protection with relatively safe equity strategies either in the U.S. (CUDV-T) or globally (CGDV-T).

· Evolve (ESPX-T / ETSX-T) Hamilton (HMAX-T) and RBC (RCDC-T / RUDC-T) focused on covered call strategies applied on market indices, sectors or dividend portfolios.

BMO ETF ZEAT-T offers a new alternative to the iShares Global Agriculture Index ETF (COW-T) from Blackrock, which was the only ETF in our database targeting agriculture. Rising food inflation has certainly had an impact on the launch of this strategy, which has been the subject of much discussion over the past year.

The BMO ETF offers 30 holdings for a management fee of 0.35% while the Blackrock ETF proposes 36 securities for a management fee of 0.65%.


ETSX-TEvolve S&P/TSX 60 Enhanced Yield FundEquityCovered CallMedium1/9/20230.45%
ESPX-TEvolve S&P 500 Enhanced Yield FundEquityCovered CallMedium1/9/20230.45%
RCDC-TRBC Canadian Dividend Covered Call ETFEquityCovered Call, DividendMedium1/17/20230.64%
RUDC-TRBC US Dividend Covered Call ETFEquityCovered Call, DividendMedium1/17/20230.64%
CUDV-TCI U.S. Minimum Downside Volatility Index ETFEquityLow VolatilityMedium1/19/20230.30%
CGDV-TCI Global Minimum Downside Volatility Index ETFEquityLow VolatilityLow to Medium1/19/20230.35%
HMAX-THamilton Canadian Financials Yield Maximizer ETF EquityCovered CallMedium1/20/20230.65%
CUEH-TCIBC U.S. Equity Index ETF (CAD-Hedged)*EquityLarge CapMedium1/23/20230.05%
CSBI-TCIBC Canadian Short Term Bond Index ETFFixed IncomeShort-TermLow1/23/20230.07%
ZEAT-TBMO Global Agriculture ETFEquityAgricultureMedium1/23/20230.35%
ZUAG-TBMO US Aggregate Bond Index ETFFixed IncomeMid-TermLow to Medium1/26/20230.08%
TIPS-TBMO US TIPS Index ETFFixed IncomeMid-TermLow to Medium1/26/20230.15%
ZWEN-TBMO Covered Call Energy ETFEquityCovered Call, EnergyHigh1/26/20230.65%
ZWHC-TBMO Covered Call Health Care ETFEquityCovered Call, Heath CareMedium1/26/20230.65%
ZGRO.T-TBMO Growth (Fixed Percentage Distribution Units) ETF*Multi AssetGrowthLow to Medium1/26/20230.18%

Source: Inovestor

*Existing strategies with a new class or structure


CSD-TiShares Short Duration High Income ETFFixed IncomeShort-termLow1/25/20230.55%

Source: Inovestor

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

Editor’s note: An earlier version contained inaccurate information on the composition of the agriculture ETFs.