Based on the National Bank ETF Research and Strategy report, Canadian ETFs saw an inflow of $9.7 billion in June. Fixed income ETFs topped in net creations of around $6.85 billion while inflows in equity slowed to $2.27 billion compared to last month. Crypto continues to see an exodus with net redemptions of $20 million.
While the US Fed held interest rates steady in June, Canada was the first G7 country to trim its key policy rate by 25 basis points. Lowering interest rates typically stimulate the economy by spurring consumer spending and incentivising companies to invest in projects. On the equity markets side, most indices were up with the S&P 500 and Nasdaq hitting new highs during the month.
Wall street heavy weights made headlines in the AI space as chipmaker Nvidia completed a 10-for-1 stock split, its largest since going public in 1999. Apple joins in on the momentum with its partnership with Open AI bringing its market value into the 3-trillion-dollar range, making it the most valuable company in the world by market cap.
Perhaps not anticipating another strong market showing, investors appeared to favor fixed income investments with the top four inflows going to the BMO Aggregate Bond Index ETF (ZAG-T), BMO Money Market Fund ETF series (ZMMK-T), BMO Short Corporate Bond Index ETF (ZCS-T), and BMO Mid Corporate Bond Index ETF (ZCM-T).
Simultaneously, investors appear to be moving away from ESG investing with BMO MSCI USA ESG Leaders Index ETF (ESGY-T) topping in outflows for the month.
Additions
In June, the Canadian market witnessed the introduction of 15 new ETFs, predominantly brought forth by three providers: Franklin Templeton Investments, Mackenzie Financial Corporation and 1832 Asset Management L.P (Dynamic Funds).
Franklin ETFs
Franklin added 4 new ETFs majority being multi-asset ETFs and one Equity ETF this month. The multi-asset ETFs have their own asset allocation limits mainly in equity securities and debt instruments.
Franklin Conservative Income ETF (CNV), Franklin Core ETF Portfolio (CBL), Franklin Growth ETF Portfolio (GRO), and Franklin All-Equity ETF Portfolio (EQY) will all invest primarily in a mix of ETFs that focus on Canada, U.S. and international fixed income and equity securities, but separated by their respective risk rating.
Mackenzie ETFs
Mackenzie launched 3 new equity ETFs. Mackenzie Canada Low Volatility ETF (MCLV) and Mackenzie US Low Volatility ETF (MULV) seeks to invest in Large and Mid cap companies in their respective regions that are undervalued, high quality and have attractive growth opportunities, with the objective of minimizing the impact of volatility.
Mackenzie Global Dividend ETF (MGDV) seeks to invest in global companies that have above average yield with potential for growth at attractive valuations. The Fund will concentrate in 3 sectors (financials, energy and materials) with a focus on equity securities but may invest in fixed income, trust and other securities such as convertible bonds and warrants. It also has a ceiling limit of 25% asset allocation in emerging markets.
1832 Asset Management L.P: Dynamic ETFs
Dynamic Active Mining Opportunities ETF (DXMO) seeks to invest into global equity securities of companies engaged in the exploration, development and production of metals and minerals, including precious metals, industrial metals and critical minerals.
Dynamic Active Global Gold ETF (DXAU) seeks to invest in global companies engaged in the exploration, development and production of gold globally.
Dynamic Active Real Estate ETF (DXRE) seeks to invest globally in companies with the business of ownership and management of real estate assets which include companies relating to real estate industry.
Other ETF Launches
CI U.S. Quality Dividend Growth Index ETF (DGR.U) seeks to track the price and yield performance of the WisdomTree U.S. Quality Dividend Growth Index USD. This ETF is the U.S. version of its already existing Canadian counterpart (DGR).
Harvest Premium Yield Treasury ETF (HPYT.B) seeks to provide high monthly cash distributions to unitholders by investing in longer term U.S. treasury bonds and deploying active covered call strategies.
Hamilton REITs YIELD MAXIMIZER™ ETF (RMAX) provides exposure to the portfolio of Canadian and U.S. REITs while using coverall call strategies to lower volatility and generate income through option premiums.
Quadravest Preferred Split Share ETF (PREF) primarily invests in a portfolio of preferred shares of split share corporations listed on a Canadian exchange. The ETF may also invest in preferred shares of ETFs, other equities, income generating securities and other securities that are convertible to preferred shares.
Purpose Ether Staking Corp. ETF (ETHC.B) provides exposure in a crypto asset by investing and holding all its assets in long-term holdings of Ether in order to provide investors with a secure, convenient alternative to a direct investment in Ether.
Amy Mak, is senior financial analyst at Inovestor.
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