In April 2020, the inflow of money to exchange-traded funds (ETFs) slowed to $655 million compared to a little over $2 billion in April 2019, according to the May 4, 2020, edition of the National Bank of Canada’s Canadian ETF Flows report.
This slowdown did not, however, prevent ETF listed assets from crossing the $200 billion threshold.
Bonds deserted
Fixed income ETFs lost $322 million in April. This was the second month in a row of fixed income ETF redemptions. According to this report, these were mostly from Canadian aggregate and corporate bond ETFs.
Canadian and U.S. equity also suffered outflows in the April rally but, that same month, global equity welcomed inflows of $575 million.
Investors once again gravitated to gold equity and gold commodity ETFs for safety and inflation hedging, while commodity ETFs drew $153 million in inflows.
Two difficult months for bonds
According to this report, in March and April combined, fixed income ETFs saw outflows of $1.6 billion, while other Canadian ETFs attracted $5 billion in aggregate. “Bond markets were plagued by volatile market conditions,” it concluded.
National Bank of Canada drew a parallel with mutual funds. “In the world of Canadian mutual funds, net outflows in March amounted to a record outflow of $18.2 billion, out of which $6.2 billion came from bond mutual funds,” it reported.
A different start to the year
Inflows into Canadian ETFs total $16 billion year-to-date. As opposed to last year, when fixed income dominated inflows, equity ETFs have so far attracted $10.8 billion in 2020, surpassing all other asset classes.
Among the initiatives that have created the most excitement for equity ETFs, the National Bank of Canada highlighted thematic ETFs – especially environmental, social, and governance (ESG) ETFs. Thematic equity alone has drawn inflows of $843 million so far this year.
