Canadian ETFs added $4.2 billion in November, the highest monthly inflow since last March, according to National Bank Financial Markets. Both equities and fixed income ETFs had positive net flows during the month. Within the equity asset class, all geographies had positive flows, as Canadian equity led the way with $745-million of inflows. Among the sector-focused ETFs, all sectors had positive flows except for financials, which saw $166-million in redemptions. Dividend/Income focused ETFs continued their streak of positive inflows, adding $343-million in November.
Fixed income products added another $2.3-billion in November, bringing the total year to date inflow to $13-billion and outpacing the equity asset class. Cash alternative ETFs continued their strong run, welcoming another $1.2-billion. High interest savings ETFs from CI Financial and Horizons (CSAV-T, CASH-T and PSA-T) were once again among the top single ETF inflows again this past month. What differed this month was the renewed interest in longer duration fixed income categories. Contrary to previous months, mid term, long term and aggregate bond ETFs had positive inflows, while short term and ultra-short term maturities had strong outflows. Slowing inflation coupled with the growing expectation of smaller rate hikes in the future may have led investors to increase their appetite for duration.
There were eleven new ETF launches in the month of November. BMO Global Asset Management teamed up with Cathie Wood’s ARK Investment Management to make three of ARK’s existing ETF strategies available to Canadian investors. The BMO ARK Innovation fund (ARKK-T), BMO ARK Genomic Revolution Fund (ARKG-T) and BMO ARK Next Generation Fund (ARKW-T) all aim to provide exposure to companies across various sectors that are well positioned to benefit from the theme of disruptive innovation. Cathie Wood and her ARK ETFs became well-known during the pandemic for her bullish bets on tech companies like Tesla, Block and Zoom. The new Canadian-listed BMO ARK ETFs charge a 0.75-per-cent management fee.
In November, Arrow Capital Management released another liquid alternative ETF to its product lineup. The Arrow Canadian Advantage Alternative ETF (ACAA-T) is managed using a proprietary macro investment process to tactically allocate the portfolio to the different asset classes using both long and short positions. The mutual fund series of this strategy has existed since 2008, providing investors with the potential for low volatility and diversification benefits. The ETF series trades on the TSX and charges a management fee of 0.65 per cent.
Manulife Investment Management introduced new additions to their factor-based Smart ETF lineup. The Manulife Smart International Defensive Equity ETF (IDEF-B-T) invests in a diversified portfolio of international equity securities while seeking to reduce overall market sensitivity. Meanwhile, the Manulife Smart International Dividend ETF invests in a diversified portfolio of international dividend-paying securities. Both these ETFs charge a management fee of 0.35 per cent. The USD units of Manulife’s existing US Smart ETFs were also launched during the month, for investors who wish to own Canadian-listed ETFs in US dollars.
Ben Kleinberg is product manager at Inovestor