With markets rebounding to begin the year, ETF investors withdrew money from equity and bond funds, according to National Bank Financial.
“After a record-breaking month of inflows in December 2022, Canadian ETFs took a pause and bled $342 million” in January, according to the report released last week.
The redemptions came as markets surged. The S&P 500 gained more than 6% in January, the Nasdaq was up almost 11% and the S&P TSX composite was up about 7%.
Last year, even as stock and bond markets tanked, June was the only negative month for ETF flows.
Equity ETFs lost $328 million in January, while $501 million was withdrawn from fixed-income funds in a rare month of redemptions for both asset classes.
Flows into cash alternative ETFs remained strong last month, at $641 million, and long-term bond funds brought in $330 million. However, $667 million flowed out of short-term bond funds, and another $303 million was withdrawn from ultra-short-term products, both of which were popular last year.
By type, Canadian aggregate bond funds saw the highest redemptions with $611 million withdrawn.
On the equities side, broad-based index funds saw large withdrawals, including $307 million flowing out of the BMO S&P 500 Index ETF and $251 million from the iShares S&P/TSX 60 Index ETF.
“In a rare confluence, all three top issuers — RBC iShares, BMO and Vanguard — suffered net outflows,” the report said.
Dividend, low-volatility, thematic and ESG funds fared better, with each category gaining last month.
Crypto ETFs had their strongest month since August, bringing in $105 million as bitcoin and ether rebounded strongly in January after last year’s collapse.
ETF assets totalled $328.93 billion at the end of January, up from $314 billion at the end of December, despite the outflows.
Twenty-two new ETFs were listed in January, bringing the total to 1,317.