ETFs gathered $9.7 billion in June, a monthly record in the history of Canada-listed ETFs, National Bank Financial Inc. said in a monthly research report.
Monthly inflows surpassed the previous record — in February 2020 — by 25% (adjusted for ETF cross holdings).
“This brings the year-to-date inflow figure for 2024 to $33.3 billion, also on track to beat any previous annual inflow record,” the report said.
Fixed-income funds led the monthly flows with a record-breaking $6.8 billion, thanks in part to an institutional switch trade. The inflows were spread across all categories except preferred shares ETFs.
“Investor demand for fixed-income ETFs was strong, even outside the pattern of institutional inflows,” the report said. “Canadian aggregate bond, money market and global bond were the favoured categories.”
That result was in contrast to the previous two years, when cash alternative ETFs dominated; in June the funds pulled in $108 million.
Equities accounted for $2.3 billion of June inflows, compared to $2.6 billion in May. The U.S. category had redemptions of $432 million, likely also part of a switch trade from institutional investors, the report said.
Cryptoasset ETFs continued to exhibit outflows, with $20 million in redemptions in the month.
The top seven ETFs in June by inflows were all low-cost core-exposure funds from BMO — again, the result of “a clear institutional allocation,” the report said. Likewise, funds with the highest monthly outflows were also BMO ETFs: an ESG fund and one tracking a Japan index.
While 14 new ETFs came to market, including asset allocation ETFs and an ether staking ETF, what continued to be missing in June were ESG ETF launches. None has launched this year, compared to nine last year.
ESG ETFs also saw $1.8 billion in outflows in June.
“The recently enacted Bill C-59 in Canada may have a long-lasting effect on ESG investing,” the report said. “[I]ts anti-greenwashing communication provisions could potentially prompt companies to scale back their ESG disclosures for fear of falling afoul of expansive new rules, thereby presenting a headwind to the increased adoption of investments in ESG ETFs for disclosure purposes.”
The legislation would be good news for clean energy ETFs, the report noted, and may incentivize investments in clean energy.