ETF industry weathers October’s market storms

Canadian ETFs had total net inflows of $1.1 billion in the month as a result of investors’ move toward U.S. and international equity ETFs

By: IE Staff
November 5, 2018 October 17, 2019
12:30

Although equities markets experienced one of the most volatile months since the global financial crisis, Canadian ETFs still reaped strong net inflows of $1.1 billion in October — and two new providers of ETFs issued their first products in the month, according the latest Canadian ETF Flows report from Toronto-based National Bank Financial Inc. (NBF).

U.S. and international equities ETFs led the way, with inflows of $664 million and $514 million, respectively, in October. In contrast, fixed-income ETFs, which had experienced steady inflows during the first nine months of 2018 and strong inflows of $652 million in September, suffered minor net outflows of $88 million “as investors pulled assets from aggregate bond and long bond ETFs, shifting to ultra-short term for safety,” according to the NBF report.

The ETF industry had a total of $157.4 billion in assets under management (AUM) as of Oct. 31, down by 3.6% from $163.2 billion as of Sept. 30, as a result of the drop in the value of global stocks.

In terms of ETF providers, Toronto-based BMO Asset Management Inc. (BMOAM) had the most inflows in the month, at $913 million. BMOAM now has almost $49.4 billion in ETF AUM and is catching up to the market leader, BlackRock Canada Asset Management Ltd.’s iShares division, with $56.2 billion in AUM. BlackRock’s iShares division experienced the most outflows of any provider in October, at $555 million, the NBF report reveals.

Rounding up the top five ETF providers, Toronto-based Vanguard Investments Canada Inc., with $17.1 billion in AUM, had inflows of $175 million while Horizons ETFs Management (Canada) Inc. and RBC Global Asset Management Inc. (RBCGAM), both also based in Toronto, suffered outflows in the month. Horizons, which had the second-largest outflows of $249 million in October, now has $9.8 billion in AUM while RBCGAM, which had outflows of $57 million, now has $4.9 billion in AUM.

Year-to-date as of Oct. 31, BMOAM has had the most inflows, at almost $4.3 billion, followed by Vanguard ($3.8 billion), Toronto-based Mackenzie Investments ($1.8 billion), the latter of which is in eight place among ETF providers with almost $3 billion in AUM, and Horizons ($1.1 billion). BlackRock’s iShares division has had the most outflows of any ETF provider, at $843 million, this year thus far.

There were two new ETF providers — IA Clarington Investments Inc. and First Block Capital, both of Toronto — that launched new products in October. IA Clarington introduced three actively managed bond ETFs, all of which are series of existing mutual funds. First Block, which seeks investment opportunities exclusively in cryptocurrency and blockchain technologies, launched an ETF that invests in diversified large-capitalization global firms that use blockchain technology.

In total, there were 16 new ETFs from eight providers launched in the month, bringing the total number of ETF providers to 33 and total number of ETFs to 760, according to the NBF report.