Record Breaking Year for ETFs Spurred by Canadians’ Interest in Sustainable Investing, Crypto and Inflation Protection

Canadians invested a record $53 billion in domestic-listed ETFs in 2021; growth expected to continue into 2022 and beyond

TORONTO, January 12, 2021 – Mackenzie Investments (“Mackenzie”) today released its annual Mackenzie Investments Year-End ETF Report. The study examines the growth of the exchange traded fund (“ETF”) industry in Canada in 2021 and analyses the trends that will influence the industry into 2022 within an economy still adjusting to the effects of the global COVID-19 pandemic.

The report finds that in 2021 ETFs benefited from uncertain market conditions and strong market gains, as Canadians invested a record-breaking $53 billion dollars 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.

“Investors are increasingly viewing ETFs as a great way to build their investment portfolios,” said Michael Cooke, Head of ETFs, Mackenzie Investments. “With a growing amount of specialized ETF products, offering efficient exposure to categories such as cryptocurrency and sustainable investing, ETFs are proving to be a cost-effective and versatile way to create a portfolio that meets specific investor needs.”

The report also identifies key trends that have emerged in 2021 and will continue to shape the industry in the  year ahead, including:

• A Focus on Sustainable Investing: In 2021 a record high $309 billion flowed into SI-focused ETFs globally as the pandemic helped to spotlight environmental, social and governance issues. This trend was reflected in Canada with significant AUM growth in domestically listed SI ETFs. As the trend of active management of SI ETFs grows, investors can expect that many new ETF issuances in the coming months will likely focus on environmental issues.
• Protecting Against Inflation: As inflation persists, investors are increasingly looking towards inflation-protection funds to help safeguard their portfolios. ETFs are making diversification among inflation-hedging asset classes easier than ever before.
• New Cryptocurrency Opportunities: Cryptocurrency ETFs are rising in popularity after first being introduced in 2021. Canada is an innovator in this field, as the first cryptocurrency ETFs were listed by Canadian companies. These assets are attractive to investors who want access to the growth of the cryptocurrency market or to add diversification to their portfolios.
• International Opportunities: Developed and emerging market ETF categories have grown greatly in popularity among Canadians, with more than $8 billion in net flows in the past year, versus about $6 billion for Canadian and US-focused ETFs.
• Asset Allocation ETFs: These all-in-one portfolios offer different combinations of core equity and fixed income ETF exposures to align with investor goals. Asset allocation ETFs are gaining popularity among Canadians and accounted for 11 per cent of net flows in Canadian ETFs.

The report notes that Canadian ETF industry growth is expected to continue in 2022 and beyond as Canadian investors complement their core holdings with more specialized and thematic ETFs, especially among key groups such as millennials, women and financial advisors.

“We’ve seen huge year-over-year momentum in the Canadian ETF space. Product offerings continue to grow across the industry with core and satellite ETFs that support virtually any investment strategy,” observed Mr. Cooke.  “In 2022, investors will likely continue to incorporate ETFs into their portfolios at a record pace thanks to their increasing prevalence and their ability to provide precise exposures and cost efficiencies.”  

To read the full report, please visit mackenzieinvestments.com.