Exchange traded funds grew at a record pace in 2021

Investors will likely continue to incorporate exchange-traded funds (ETFs) into their portfolios at a record pace in 2022, following record growth in 2021, according to the 2021 Mackenzie Investments Year-End ETF Report which examines the growth of the ETF industry in Canada.

The report states that in 2021 ETFs benefitted from uncertain market conditions and strong market gains. “Canadians invested a record-breaking $53-billion into the space. The marketplace in Canada also grew to a record-breaking 1,177 Canadian listed ETFs, up from 1,010 at the end of 2020,” Mackenzie researchers write. The $53-billion is a 27 per cent year-over-year increase in total inflows.

Key trends highlighted in the report include a focus on sustainable investing. The report states that $309-billion flowed into sustainable investing-focused ETFs globally in 2021. “As the trend of active management of sustainable investment ETFs grows, investors can expect that many new ETF issuances in the coming months will likely focus on environmental issues.” Prerna Mathews, vice president of ETF product and strategy at Mackenzie Investments says most of the new issuances that will come out in the months ahead will likely focus on the environment.

Researchers add that investors are also increasingly looking to inflation protection funds to help safeguard their portfolios. “ETFs are making diversification among inflation-hedging asset classes easier than ever before.” 

Cryptocurrency ETFs are also rising in popularity after first being introduced to the world by a Canadian company in 2001. Internationally, developed and emerging market ETFs also enjoyed more than $10.7-billion in net flows during the year. Finally, Mackenzie’s researchers say asset allocation ETFs are gaining popularity, accounting for 11 per cent of net flows in Canadian ETFs.

“We’ve seen huge year-over-year momentum in the Canadian ETF space. Product offerings continue to grow,” says Mackenzie Investments head of ETFs, Michael Cooke. “In 2022 investors will likely continue to incorporate ETFs into their portfolios at a record pace.”