From April 29 to May 31, spanning a five-week period, Canadian ETFs saw an inflow of $6.3 billion, according to Scotiabank. Equity ETFs saw another substantial inflow of around $4.4 billion in net creation, while inflows in fixed income declined compared to the previous month, accounting for $1.8 billion.
A major milestone occurred in the month of May where the Dow Jones Industrial Average touched the 40,000 mark for the first time in history. Consumer optimism on economic growth and recovery has helped fuel strong earnings from consumer discretionary stocks like Walmart, Amazon, and American Express.
The BlackRock’s iShares Core S&P/TSX Capped Composite ETF (XIC-T) experienced the largest inflows at $0.54 billion, followed by the Vanguard S&P 500 Index ETF (VFV-T) at $0.45 billion. In May, investors moved towards investments in the broad market indexes of both Canada and the U.S. Cash holdings declined in favour of equities. CI Global Artificial Intelligence ETF (CIAI-T) topped in terms of thematic investing and received an inflow of $0.45 billion as investors continue to capitalize on the AI trend.
CI High Interest Savings ETF (CSAV-T) and iShares S&P/TSX 60 Index ETF (XIU -T) were the highest outflows for the month.
Additions
In May, the Canadian market witnessed the introduction of 29 new ETFs, predominantly brought forth by Global X Investments Canada Inc. and Fidelity Investments Canada ULC.
Global X
Global X added 19 new ETFs with the majority being equity based. Majority of the newly launched ETFs will track the performance of their respective indexes.
The traditional index tracking ETFs are as follows: Global X S&P/TSX 60 Index ETF (CNDX), Global X Nasdaq-100 Index ETF (QQQX, QQQX.U), Global X S&P 500 Index ETF (USSX), Global X Enhanced Nasdaq-100 Index ETF (QQQL), Global X S&P 500 Index ETF (USSX, USSX.U), Global X Enhanced S&P 500 Index ETF (USSL), Global X MSCI EAFE Index ETF (EAFX.U)
The enhanced series of ETFs that employ a leverage factor of 1.25x include Global X Enhanced MSCI EAFE Index ETF (EAFL), Enhanced MSCI Emerging Markets Covered Call ETF (EMCL), and Global X Enhanced MSCI EAFE Covered Call ETF (EACL), and Global X Enhanced MSCI Emerging Markets Index ETF (EMML).
Global X MSCI EAFE Covered Call ETF (EACC) invests like EAFX ETF for capital growth, and in addition also deploys a covered call strategy on equities under MSCI EAFE Index to mitigate downside risk and generate income to the investors.
Concentrating in the emerging market region are Global X MSCI Emerging Markets Index ETF (EMMX.U) and Global X MSCI Emerging Markets Covered Call ETF (CA) (EMCC).
Global X Artificial Intelligence & Technology Index ETF (AIGO) and Global X Innovative Bluechip Top 10 Index ETF (TTTX) seeks exposure to companies focussed on AI and Big Data.
Global X All-Equity Asset Allocation Covered Call ETF (EQCC) seeks to provide a combination of a high level of income (covered call strategy) and long-term capital growth investing in globally diversified portfolio of equity securities.
Global X Short-Term Government Bond Premium Yield ETF (PAYS) seeks to provide exposure to the performance of Canadian government debt securities of duration less than 3 years with the objective of generating high monthly distributions of interest income and option premiums.
Fidelity
Fidelity Global Equity+ Balanced Fund (FGEB) invests in 55% in equity (MSCI All Country World Index) and 45% in fixed income (Bloomberg U.S. Aggregate Bond Index – Hedged to CAD).
Fidelity Global Equity+ Fund (FGEP) invests primarily in global equity securities of companies. The Fund can invest in these securities either directly or indirectly through investments in underlying funds, which may include liquid alternative mutual funds.
Fidelity Tactical High-Income Fund (FTHI) invests primarily in a mix of income-producing global securities including convertible debentures, traditional bonds and equities. It can invest in these securities either directly or indirectly through investments in underlying funds.
Fidelity Emerging Markets Fund (FCEM) invests primarily in equity securities of companies in emerging market countries.
Other ETF Launches
CI Global Artificial Intelligence ETF (CIAI) invests primarily in global equity securities of companies that are actively involved in the research, development and application of artificial intelligence technologies.
CI U.S. 500 Index ETF (CUSA) tracks Solactive GBS United States 500 CAD Index (CA NTR) to replicate the performance of the largest 500 companies from the U.S. stock market.
Accelerate Diversified Credit Income Fund (INCM) invests in an alternative source of yield focusing on the private credit market and exposure to a diversified portfolio of primarily secured, floating-rate loans through allocations to leading liquid private credit vehicles. Accelerate Diversified Credit Income Fund (US dollar) (INCM.U) will provide USD units for INCM.
The Brompton Canadian Cash Flow Kings ETF (KNGC) and Brompton U.S. Cash Flow Kings ETF (KNGU) were introduced to gain exposure to publicly listed companies with the highest free cash flow yields.
Amy Mak is senior financial analyst at Inovestor
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