International equity ETFs remained a crowd favourite in May: report

Canada’s ETF industry “re-accelerated” in May, with inflows totalling $9.2 billion, a report from National Bank Financial Inc. shows.

That’s up from $7.3 billion the previous month.

Equity ETFs dominated inflows in May, with $4.3 billion pouring into the asset class. However, “the pace of equity inflows overall has slowed down since the tariff pause announcements on April 9,” the report noted.

On a regional basis, international equity ETFs were especially popular, accounting for $2.7 billion or 62% of the total equity inflows. U.S. and Canadian equity ETFs followed behind, drawing $1.2 billion and $378 million in inflows, respectively.

In terms of fund focus, cap-weighted equity ETFs drove inflows, pulling in $2.9 billion. Meanwhile, sector-based equity ETFs dominated outflows, with investors pulling $830 million out of the funds, mostly owing to financials ETFs. Multi-factor equity ETFs also suffered redemptions, at $199 million, while growth equity ETFs lost $49 million.

Fixed income ETFs reported $3.4 billion in creations, with broad-based Canadian aggregate bond ETFs making up the largest share of inflows for the asset class, at $1 billion.

All other fixed income fund categories were in positive territory too, including Canadian corporate bond ETFs, which took in $686 million, and Canadian government bond ETFs, which received $589 million.

“Fixed income ETFs staged a comeback after a slow April marked by significant rate volatility surrounding the U.S. tariff announcements,” the report said.

“Investors both increased their duration and descended the credit ladder in their product selections, highlighting a growing appetite for risk.”

Meanwhile, multi-asset ETFs reported $869 million in creations and inverse/leveraged ETFs attracted $495 million.

Led by gold bullion ETFs, commodities ETFs reported inflows of $135 million.

Crypto-asset ETFs received a slight bump, with $6 million in inflows.

ESG ETFs gathered $630 million in May, with the bulk of that going to the iShares ESG Aware MSCI EM Index ETF (TSX: XSEM), which received $541 million on a single day, “a typical pattern for an institutional subscription,” the report said.

The report also noted that “sustainable” was removed from the name of three Franklin Templeton ETFs — the Franklin ClearBridge Global Infrastructure Income Fund (TSX: FCII), Franklin ClearBridge International Growth Fund (TSX: FCSI) and Franklin Brandywine Global Income Optimiser Fund (TSX: FBGO) — though all three maintain their ESG investment criteria.

Thirty-nine new funds hit the market in May. This brings the total number of ETFs in Canada to 1,626.

The fund launches included ETFs offering exposure to collaterized-loan obligations, Canada’s first triple-leveraged ETFs, new ETF series of existing mutual funds and a gold bullion fund with a covered call spread strategy.

Year-to-date inflows reached $48.5 billion as of the end of May.