ETF inflows surged in August

Equity ETFs led the way during the month, with almost $1.9 billion in net flows, followed by fixed-income funds with $835 million worth.

“Canadian equity flows were buoyed by creations in XIU, as well as some low-cost index tracking products, dividend strategies and the gold sector,” the report states. Indeed, August saw the highest Canadian equity flows of the year so far, at $1.3 billion.

The August data may be “slightly skewed” by structural changes at Invesco Canada Ltd. and Purpose, the report says. Invesco is adopting its ETFs as underlying funds for some of its traditional mutual funds, while Purpose Investments Inc. converted a number of its closed-end funds into ETFs.

“At the same time, investors are naturally clamouring for fixed income ETFs of almost every flavour, including both passive and active,” the report states.

Thanks to August’s strong overall activity, ETF inflows topped $13.8 billion through the first eight months of the year. Almost $9 billion of that total has flowed into equity ETFs, with $5.2 billion flowing into international equity, $2.8 billion into U.S. equity, and  $907 million into Canadian equity.

Another $4.1 billion has flowed into fixed-income funds this year, while $918 million has flowed into multi-asset products.

According to the report, bond ETFs have attracted flows into three main areas: low-cost aggregate products for pure and broad exposure; preferred shares, mainly actively managed; and global bond ETFs.

The four largest ETF providers — BlackRock Canada Asset Management Ltd.’s iShares division BMO Asset Management Inc. (BMOAM), Vanguard Investments Canada Inc. and Horizons ETFs Management (Canada) Inc., all based in Toronto,— each recorded new asset growth of between 1% and 2% in August.

Vanguard led the way through the first eight months of the year, with $3.4 billion in net flows, followed closely by BMOAM with $3.2 billion.