Canadian ETF industry reports solid growth in 2011

Fixed income ETFs post $3 billion in net sales

By: Megan Harman
January 16, 2012 January 16, 2012
11:20

The Canadian exchange traded fund industry continued to enjoy steady growth in the fourth quarter of 2011, despite substantial market volatility, the Canadian ETF Association announced on Monday.

Canadian-listed ETFs saw net new sales of nearly $3 billion in the fourth quarter, wrapping up the year with more than $7.6 billion in net new sales, the latest Quarterly ETF Asset Flow Report shows.

These strong sales helped Canadian ETF assets grow by nearly 13% to slightly more than $43.1 billion in 2011.

Fixed income ETFs led sales in 2011, accounting for approximately $3 billion in net creations in during 2011, with $1.4 billion in net creations occurring in Q4 alone. More broadly, ETFs that paid regular income distributions accounted for more than $4.4 billion in net creations during 2011, reflecting strong investor demand for yield.

Canadian fixed income ETFs now account for 27.5% of the ETF market in Canada, up sharply from 22.3% a year ago.

In comparison, Canadian equity ETFs saw sales of $1.3 billion in 2011, including $595 million in the fourth quarter. Of those Q4 sales, $558 million flowed into just one ETF: the iShares S&P/TSX 60 Index Fund, which has the most assets under management of any ETF in Canada.

Within the category, dividend equity ETFs saw net inflows of $112 million in the fourth quarter, and sector equity ETFs enjoyed net sales of $240 million.

As fixed income ETFs gain market share, equity funds have lost ground. Equity ETFs account for 32.6% of Canadian-listed ETFs, down from 37.7% last year.

Covered Call ETFs also saw strong inflows in 2011, attracting more than $1.2 billion in net sales during the year. In fact, the most successful ETF launch in 2011 in terms of sales was the BMO Covered Call Canadian Bank ETF, which generated $703 million in net creations throughout the course of the year.

Other popular launches included the Horizons Enhanced Income Equity ETF, which generated $247 million in net creations, and Claymore Short Duration High Income ETF, which generated $195 million in net creations.