Canadian ETF Fund Flows: A Snapshot of 2023 Trends

In reviewing Canadian ETF fund flows for 2023, we observed the following trends.

Fixed Income

It appears investors took a more conservative posture, as almost 60% of new assets during 2023 went into fixed income products. Equal amounts were allocated to ultra-short duration and broad investment grade bond market exposure cycling out of short duration.

Equities

More than one-third of new assets went into the equity space. The majority of the assets found their way in broad equity exposure and high dividend yield from domestic stocks.

Regarding sector-specific equity investments, there was a notable shift in geographic exposure as assets transferred from global exposure to focus on developed markets specifically. Money came out of global financials, agriculture, and energy and significant investments went into developed markets technology, banking, healthcare, and energy.

Currency Funds

Of the flows into currency funds, 90% of the new assets went into Long Bitcoin, Short CAD exposure. Canada is a few years ahead of the US in providing cryptocurrency exposure through the ETF structure.

As a result, the US is playing a bit of catch up—beginning this month, spot bitcoin exposure in an ETF wrapper will be available for US investors to consider. It will be interesting to watch for the impact this may have on the related products available in Canada.

As one would expect, in anticipation of more products becoming available and having to purchase bitcoin, all Canadian funds in this space experienced steady inflows during the last quarter of 2023. Speculators will be watching for the impact of the upcoming bitcoin halving in May.

Below are the monthly 2023 flows into the two largest Canadian funds for spot Bitcoin exposure.

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