Volatility stifles ETFs in Canada, U.S.

By Staff | February 2, 2016 | Last updated on February 2, 2016
1 min read

ETF flows stagnated in Canada in January, with inflows barely positive at $22 million, according to a report by National Bank’s Daniel Straus, Ling Zhang and Tiffany Zhang. That’s in stark contrast to the strength of ETFs last year.

Read: ETF inflows boom in 2015

The report says, “Redemptions from Canadian equity offset flows to fixed income and currency-hedged U.S. equity. The main story of the month was the 5% intra-month decline in CAD vs. the USD.” As a result of that dip, “U.S. equity ETF flow tallied to $117 million on a net basis, but currency non-hedged ETFs had outflows over $300 million.”

In the U.S., ETF flows were also flat, according to a second National Bank report that finds, “Total ETF assets dropped 4.7% to US$2.03 trillion, driven by stock market volatilities in the United States and worldwide.”

Read: How institutional investors use ETFs

The report notes some “asset classes experienced strong rotations as investors piled into safer assets.” While equity ETFs saw significant withdrawals, those “outflows were mostly offset by $13.5 billion in creations in safer fixed income assets. [And], commodity ETFs took in $2 billion toward energy and gold, two areas of the market driven by very different factors.”

Advisor.ca staff


The staff of Advisor.ca have been covering news for financial advisors since 1998.