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- $25 billion flowed into the Canadian ETF market in first five months of 2021
- A record breaking $3 billion in inflows to Canadian-listed ESG-focused ETFs between January and March
- Canadian-listed ETFs are also fueling momentum and providing investors with more options
TORONTO, ON – June 22 2021 – Mackenzie Investments (“Mackenzie”) today released its 2021 Mid-Year ETF Report . The study provides an overview of the Canadian Exchange Traded Fund (“ETF”) industry in the first half of 2021 and identifies trends that will continue to influence this investing category as the country gradually emerges from the COVID-19 pandemic.
The report notes that 2021 is shaping up to be another historic year for ETF adoption in Canada. In the first five months of 2021, $25 billion flowed into Canadian ETFs, which puts the industry on a path to beat 2020’s record-breaking $41-billion year. This momentum is largely being driven by investors’ focus on equity markets, with approximately 64 per cent of inflows as of May 31 going into Canadian, U.S. and international stock funds.
“One of the drivers that’s fueling inflows this year is increased trading activity,” said Michael Cooke, Head of ETFs, Mackenzie Investments. “This reflects a more optimistic view about the future among investors, who are making larger allocations to ETFs.”
The study also identified the top trends that are driving the industry this year (and are expected to continue to do so) as the country emerges from the pandemic. These include:
- Protection from Inflation: Canadians are gravitating toward asset classes that help protect portfolios against inflation, such as broad commodities, gold, floating rate securities, TIPS and short duration fixed income. By the end of May, $458 million flowed into short maturity ETFs, second only to the $946 million that went into broad based and mixed ETFs.
- The Search for Yield: With Canadian interest rates expected to continue to be low until at least 2023, investors are increasingly turning to ETFs to create a globally diversified fixed income portfolio to help reduce risk and generate yield. They are also sourcing yield from equities in dividend, REIT and infrastructure ETFs.
- Investing with ESG: The pandemic has resulted in a renewed interest in environmental, social and governance (ESG) ETFs. Between January and March, a record-breaking $3 billion flowed into Canadian-listed ESG-focused ETFs, up from about $1.8 billion in all of 2020.
- More Canadian ETF Options: There are now more than 900 Canadian-listed ETFs – and this number is expected to grow throughout the second half of the year. In addition to providing potential tax advantages, it’s easier for the average investor to buy and sell Canadian-listed ETFs, and they don’t have to worry about currency fluctuations if they hold currency hedged ETFs.
- ETF Innovation Continues as Funds Get More Tactical: More choice has and will allow investors and advisors to be more tactical with their ETFs. As the world moves forward there will be an even greater need for ETF innovation. The report notes that the world’s first bitcoin ETF launched in Canada earlier this year.
“It looks like 2021 will be another historic year for inflows, with more Canadian investors and advisors using ETFs in the way they should be used: to create long-term portfolios tailored to one’s individual financial goals. What’s clear is that there are a variety of factors that are driving strong interest in the ETF space as we gradually emerge from the pandemic,” concluded Mr. Cooke.
The full report can be found at www.mackenzieinvestments.com.