Equity, inverse/leveraged and crypto-asset ETFs favoured by investors in July

Canadian ETFs recorded inflows of $9.9 billion in July as investors poured money into equity, leveraged and inverse and crypto-asset funds. They pulled back from commodities funds, a report from National Bank Financial Inc. (NBF) shows.

Equity ETFs dominated the total inflows, gathering $5.8 billion in the month.

On a regional basis, international equity ETFs accounted for $2.8 billion of the total, followed by Canadian equity ETFs at $2 billion and U.S. equity ETFs at $1 billion.

On a thematic basis, “all equity” asset allocation ETFs recorded $952 million in creations, and financials sector ETFs made a “strong comeback” with $1 billion in inflows. Meanwhile, energy sector and real estate sector ETFs suffered outflows of $163 million and $118 million, respectively.

Fixed-income ETFs registered inflows of $2.1 billion.

All fixed-income fund categories reported inflows, but flows were concentrated among Canadian corporate bond, Canadian aggregate bond, foreign bond and Canadian government bond funds. Those categories took in $639 million, $603 million, $323 million and $254 million, respectively.

Other categories recorded more modest inflows: sub investment-grade bond funds pulled in $173 million, followed by U.S./North America bond funds at $126 million, preferred/convertible bond funds at $32 million and money market funds at $22 million.

In terms of maturity, broad/mixed maturity funds drove inflows, with $1.3 billion in creations.

Leveraged and inverse ETFs pulled in $588 million during the month, “bringing the category’s year-to-date inflows to a whopping $2.6 billion or 42% of the category’s starting assets,” the report said.

Strong month for crypto

Crypto-asset ETFs had “a strong month of inflows,” gathering $222 million. Three of the top five inflow products in the category were recently launched XRP ETFs, NBF noted.

Commodities ETFs, on the other hand, suffered outflows of $212 million. This was the first monthly outflow for the category “in more than a year” and was led by the BMO Gold Bullion Series Units ETF (TSX: ZGLD).

July was “a quiet month for Canada-listed ESG ETFs,” the report said, with the category posting net zero flows overall. One ESG fund was delisted in July — the Dynamic Active Energy Evolution ETF (TSX: DXET), which launched in 2021 but had a “small” amount of assets under management (AUM).

The report also noted that 13 new ETFs hit the Canadian market in July. This includes new single-stock, leveraged/inverse ETFs from LongPoint Asset Management Inc., 0DTE options ETFs from Hamilton Capital Partners Inc. and actively managed ETFs from Ninepoint Partners LP, FT Portfolios Canada Co. and J.P. Morgan Asset Management Canada.

Total ETF AUM came in at $611.7 billion by the end of July.