Self-directed investors are driving flows into strategies such as option-based ETFs and other income products.Dado Ruvic/Reuters
After a year of record inflows and an explosion of new products, Canada’s exchange-traded fund (ETF) market heads into 2026 riding a wave of investor demand that’s reshaping how Canadians build portfolios.
Data from National Bank Financial show that Canadian ETFs saw inflows of $125.4-billion last year, smashing the previous annual record of $76-billion set in 2024. Manufacturers launched 364 new products, another record, bringing the total to 1,792 ETFs in Canada.
The number of ETF providers increased by four (SLGI Asset Management Inc., Rocklinc Investment Partners Inc., True Exposure Investments Inc., and Capstone Asset Management Inc.) to 48.
For Linda Ma, senior ETF strategist at National Bank Capital Markets, the noteworthy change beyond those numbers is where the demand is coming from.
“It’s been retail and the DIY investors,” Ms. Ma says. “Particularly, the growth rate of do-it-yourself investors has been so great that now there are more assets owned by DIY investors than advisors as a proportion of ETF assets in Canada.”
Several structural forces are contributing to that shift, from commission-free trading at discount brokerages to demographic change and the growing role of social media in shaping financial decisions.
“The latest survey by the [Ontario Securities Commission] suggests that 35 per cent of the respondents make financial decisions based on influencers,” Ms. Ma says.
“So, definitely, the rise of social media has also had something to do with the growing popularity of investors making their own investment decisions rather than outsourcing to financial advisors.”
Self-directed investors disproportionately invested in strategies such as option-based ETFs, whose assets total about $40-billion, roughly double the level of two years ago. Inflows are increasingly concentrated in higher-yielding products.
“From January to December, almost 30 per cent of inflow to option strategies went into 20-per-cent-plus yield buckets,” Ms. Ma says. “That’s really phenomenal.”
Asset allocation ETFs were another popular category, attracting close to $23-billion, more than double the 2024 total.
Andres Rincon, managing director and head of ETF sales and strategy with TD Securities Inc., says strong markets drew new investors into equities while reinforcing ETFs as the preferred vehicle.
“We are in a very strong bull market, and every time there’s a bull market, there are new investors,” Mr. Rincon says.
One of the clearest signs of the shift toward ETFs is the rise of actively managed products, which kept pace with passive funds last year, splitting inflows almost evenly, according to TD Securities. While actively managed ETFs account for only one-third of total ETF assets, more than two-thirds of new products launched last year were actively managed.
“The trend is likely to continue in 2026, with more ETF series of active mutual funds entering the ETF space,” TD Securities’ 2025 ETF recap report said.
Much of that demand comes from products such as single-stock ETFs, of which there were 80 new products launched and inflows of $3.4-billion, as well as covered-call strategies and collateralized loan obligation ETFs.
In fixed income, investors gravitated toward active management and ultra-short-term solutions as a way to manage uncertainty.
“A lot of retail is buying money market ETFs – basically hiding it under the mattress type of thing,” Mr. Rincon says. Money market ETFs saw inflows of $6.6-billion last year.
Looking south
Developments in the U.S. also shape expectations for what may come next in Canada. Mr. Rincon points to the rapid growth of structured outcome ETFs south of the border, including buffer and autocallable products, which use derivatives to generate income.
“That market basically was nothing prior to COVID,” he says. “This relatively new area has already accumulated hundreds of billions of dollars in a short few years.”
On the other hand, environmental, social and governance (ESG) investing, which surged in popularity a few years ago, appears to have fallen out of favour. However, Ms. Ma says she’s seeing a change in how ESG factors are used in portfolios rather than a retreat from sustainability altogether.
“What we think is happening is that ESG investing is no longer a siloed approach,” she says.
For ETF manufacturers, record inflows sharpen the focus on tracking investor behaviour in real time, says Chris McHaney, executive vice-president and head of investment management and strategy for Global X Investments Canada Inc.
“You can have a great idea, but if all flows are going elsewhere, then that doesn’t really matter,” he says.
Income remains a consistent draw for Canadian investors, influencing product design, he says, while favourable equity markets continue to anchor demand.
“Investors just want to stay invested and make sure they’re capturing that growth,” Mr. McHaney says.
After a record year, few expect ETF growth to stall out in 2026. While markets will shape the pace of inflows, industry participants increasingly see ETFs as a permanent feature of Canadian portfolios rather than a tactical alternative.