Investors looked to money market ETFs in February amid market uncertainties

Canada’s ETF industry maintained its “robust” momentum in February, with $9.5 billion in inflows distributed across multiple asset classes and regions, according to a monthly research report from National Bank Financial Inc.

This was the fifth consecutive month in which ETF inflows surpassed $8 billion, the report released Wednesday noted.

The fixed income category attracted $4.2 billion. Of that amount, $1.2 billion went to money market ETFs “[a]mid market uncertainties related to tariffs, renewed inflation and job market weaknesses,” the report said. It was also the highest level of inflows for these funds since June 2024.

Fixed income inflows were slightly offset by preferred shares ETFs, which reported redemptions amounting to $45 million in the month.

Equity ETFs gathered $3.9 billion between the Canadian ($707 million), American ($1 billion) and international ($2.1 billion) markets.

Multi-asset ETFs reported $912 million in creations, while inverse/levered ETFs reported inflows of $394 million.

Commodity ETFs pulled in $116 million, most of which flowed into gold bullion ETFs.

Evergreen asset allocation ETFs enjoyed $772 million in inflows, excluding all-equity ETFs.

Crypto asset ETFs, particularly low-cost options, experienced a modest boost with $15 million in inflows recorded.

ESG ETFs received $325 million in inflows, the highest amount since March 2024. Two ETFs from Invesco Canada — Invesco ESG Nasdaq 100 Index ETF (TSX: QQCE) and Invesco S&P International Developed ESG Index ETF (TSX: IICE) — accounted for the bulk, or $277 million, of the inflows.

Hedge fund-style products also experienced positive inflows, totalling $140 million, in the month.

“Given the heightened volatility and valuations of major stock indices, investors are naturally seeking alternative solutions to mitigate risks and diversity their sources of return in their portfolios,” the report said.

Canada’s ETF industry welcomed 22 new funds in February, including 11 sector-specific index ETFs from BMO Asset Management Inc. and seven single-stock ETFs from Purpose Investments.

Total ETF assets under management hit $545 billion by the end of the month.