Based on the Scotia ETF EDGE reports from Dec. 30 to Jan. 31, spanning a five-week period, Canadian ETFs saw an inflow of $15.1-billion. Equity flows experienced the bulk of the inflow $7.2-billion. Inflows into ETFs of mixed allocation surpassed fixed income with $4.3-billion versus $2.9 billion. Cash took in $0.7-billion compared to last month’s retreat of $0.2-billion. Crypto continues to experience an exodus with another month of outflows of $0.2-billion.
Artificial intelligence (AI) was the focus in January as several tech giants announced plans to invest billions in capital expenditures for infrastructure tied to AI. The space was no sooner disrupted by Chinese startup DeepSeek, whose open source AI model is reported to be more cost effective than it’s U.S. counterparts. Its entry into the market threw investors into a panic as tech stock losses weighed down the equity indexes. Nvidia suffered the biggest stock market drop in history, losing more than half a trillion of market value in one day alone.
The start of any year is usually met with anticipation and optimism after the previous month’s tax-loss selling, however the January Effect for 2025 seemed to be mixed. The performance of the major indices all etched out positive total returns for the month but subdued compared to a year ago.
The Vanguard S&P 500 Index ETF (VFV-T) amassed the most capital investment with $0.99 billion in inflows. Blackrock ETFs took the next two top spots in inflow with iShares Core Eqiuty ETF (XEQT-T) and iShares Core MSCI EAFE IMI Index ETF (XEF-T) collecting $0.43-billion and $0.34-billion respectively. BMO Equal Weight Banks Index ETF (ZEB-T) experienced the largest net outflows of $0.7-billion followed by iShares S&P/TSX 60 Index ETF (XIU-T) with $0.29-billion and iShares S&P/TSX Capped Energy Index (XEG-T) with $0.26-billion. Investors are maintaining their bullishness in the market as stock market indices continue climbing despite geopolitical turbulence around the world.
Additions
January welcomed twenty-two new ETFs to the Canadian market.
BlackRock Asset Management Canada Limited launched its spot Bitcoin ETF for the Canadian market on the Cboe Canada Exchange. The iShares Bitcoin ETF (IBIT-T) and its USD-denominated units (IBIT-U-T) enables Canadian investors to get exposure to bitcoin through its U.S. counterpart as the underlying fund. With the objective of providing access to Bitcoin exposure in a turn-key convenient and efficient way, the company has also priced the fee in the low end of the range at 0.25 per cent annually.
TD Asset Management
TD Asset Management added three new ETFs from their Target Maturity Bond suite for 2028 (TNCH-T), 2029 (TBCI-T), and 2030 (TBCJ-T). These ETFs offer the benefits of a traditional bond fund like diversification and regular income with the added benefits that come with an ETF like liquidity and transparency. The set maturity date can help reduce short-term volatility and provide greater clarity of the cash flows over the defined term and the principal repayment value at maturity.
TD also issued the TD U.S. Cash Management ETF (TUSD.U), which seeks to earn a high rate of interest income while preserving capital and maintaining liquidity. The ETF will invest primarily in high-quality debt securities such as money market and short-term fixed income securities denominated in US dollars.
Additionally, TD launched the U.S. version of TD Q U.S. Small-Mid-Cap Equity ETF (TQSM-U-T). The fund utilizes a quantitative approach to security selection to invest primarily in, or gain exposure to, equity securities of small or medium-sized issuers located in the United States.
Harvest ETFs
Harvest Portfolios Group announced its offering of High Income Shares ETFs. The Harvest High Income Shares ETFs seeks to provide Unitholders with long-term capital appreciation through purchasing and holding a single common stock and high monthly cash distributions. Each of the High Income Shares offering is tethered to its respective single stock, namely Coinbase Global Inc. (CONY-T) and MicroStrategy Incorporated (MSTY-T).
The Harvest Enhanced High Income Shares ETFs seek to provide Unitholders with long-term capital appreciation through purchasing and holding, on a levered basis, a single common stock and high monthly cash distributions. Each of the Enhanced High Income Shares offering is tethered to its respective single stock, namely Palantir (PLTE-T), Tesla (TSLY-T), and Meta (METE-T). All three ETFs applies a 1.25 leverage factor.
The Harvest Diversified High Income Shares ETF (HHIS-T) seeks to provide Unitholders with high monthly cash distributions and the opportunity for long-term capital appreciation, on a levered basis, by investing in a portfolio of Harvest High Income Shares ETFs and Harvest Enhanced High Income Shares ETFs. The high monthly income and growth potential stems from exposure to Microsoft, Amazon, Eli Lilly, NVIDIA, MicroStrategy, Coinbase, Tesla, Palantir, and Meta by investing in Harvest Single Stock ETFs that use a covered call strategy. Most of the underlying ETFs in this ETF employ modest leverage to create overall leverage exposure between 20-25 per cent and high monthly cash distributions for its unitholders.
Hamilton ETFs
Hamilton Capital Partners Inc. added five new ETFs to its lineup. The Hamilton Canadian Financial Index (HFN-T) offers low-cost exposure to Canada’s largest Canadian financial services companies with a tax efficiency monthly income from Canadian eligible dividends.
The company also unveiled the HAMILTON CHAMPIONS suite of ETFs with the objective of long-term growth from exposure to blue-chip Canadian and U.S. companies with consistent tract records of growing dividends. The HAMILTON CHAMPIONS ETFs are designed to track the Solactive Dividend Elite Champions Indices. Both the Canadian and U.S. indices have demonstrated strong performance and low volatility historically relative to the S&P/TSX 60 and the S&P 500, respectively. The HAMILTON CHAMPIONS Canadian Dividend Index ETF (CMVP-T) and the HAMILTON CHAMPIONS U.S. Dividend Index ETF (SMVP-T) are currently priced at an effective management fee of 0% until January 31, 2026. The enhanced versions of those ETFs were simultaneously launched, HAMILTON CHAMPIONS Enhanced Canadian Dividend ETF (CWIN-T) and HAMILTON CHAMPIONS Enhanced U.S. Dividend ETF (SWIN-T), which follows that same strategy but utilizes a modest 25-per-cent leverage to enhance long-term growth potential.
Fidelity ETFs
Fidelity Investments Canada introduced six new ETFs. The Fidelity Core U.S. Bond ETF (FCUB-T) and its USD-denominated units (FCUB-U-T) concentrates on the U.S. investment-grade fixed income market. The Fidelity Absolute Income Fund (FCAB-T) and its USD-denominated units (FCAB-U-T) invests primarily in a mix of fixed income securities of U.S. issuers and other issuers from around the world.
On the equity side, the Fidelity Advanced U.S. Equity Fund (FAUS-T) and its USD-denominated units (FAUS-U-T) aims to achieve long-term capital growth by investing primarily in equity securities of U.S. companies.
Other ETF Launches
Arrow Capital Management Inc. unveiled another liquid alternative fund, the Front All-Weather Alternative Fund (WAAV-T), which aims to provide long-term capital appreciation by investing primarily in major global markets in order to provide broad exposure to global asset classes and strategies around the world.
Dynamic Funds introduced the Dynamic Active Innovation and Disruption ETF (DXID-T) and its USD-denominated units (DXID-U-T) which invests in a portfolio of primarily equity securities located anywhere in the world that can benefit from innovative technologies or novel technology driven business models.
Lastly, Franklin Templeton introduced the Franklin U.S. Mid Cap Multifactor Index ETF (CA) (FMID-T) which seeks to provide investment results that closely correspond, to the performance of its corresponding underlying index, the LibertyQ U.S. Mid Cap Equity Index.
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Amy Mak, is ETF Specialist at Inovestor.
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