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Assets invested in Exchange Traded Funds (ETFs)and Exchange Traded Products (ETPs) listed in Canada reached a new all-time high of $56.7 billion at the end of January 2013, according to figures from ETFGI’s monthly Canada ETF and ETP industry insights.
Market performance contributed to the increase in the value of assets held in ETFs and ETPs as 18 of the top 20 markets globally showed gains in January, including the S&P/TSX composite index in Canada which was up 2% in local currency terms. Two of the markets with strong gains were the US and the UK where history has shown that a strong January tends to be a good predictor for the rest of the year. A review of history in both markets shows that strong January performance is typically followed by positive returns in the subsequent 11 months.
The FTSE 100 index was up 6.5% in January, which ranks as the best start to the year since 1989. According to FTSE, 14 of the 17 Januaries with positive performance since 1984 (when the index was launched) were followed by 11 months of positive returns. Similarly, the S&P 500 index was up 5.0% in January, which ranked as the 12th best January since 1950 and the 19thJanuary since 1950 when the index was up more than 4%. Again, since 1950, January gains of at least 4% in the S&P 500 have been followed on average by gains of 15.1% in the subsequent 11 months of the year. Only once since 1950 did the S&P 500 rise by more than 4% in January and then finish the year lower than it did at January’s end – and that was in 1987.
In January 2013, ETFs and ETPs listed in Canada experienced net outflows of $522 million. Unlike ETFs listed in the US, Europe and Asia Pacific ex-Japan, where equity ETFs and ETPs experienced significant net inflows, equity ETFs/ETPs listed in Canada experienced the largest net outflows with $672 million, followed by leveraged ETFs/ETPs with $185 million, and inverse ETFs/ETPs with $12 million, while fixed income ETFs/ETPs gathered the largest net inflows with $204 million.
“A growing number of institutional investors, financial advisors and retail investors are embracing the use of ETFs and ETPs for strategic and tactical asset allocations. ETFs provide greater transparency in relation to costs, portfolio holdings, price, liquidity, product structure, risk and return compared to many other investment products and mutual funds.” according to Deborah Fuhr, Managing Partner at ETFGI.
At the end of January 2013, the Canadian ETF/ETP industry had 265 ETFs/ETPs, with 379 listings, assets of $56.7 billion, from 9 providers on 1 exchange. iShares is the largest provider in terms of assets with $41.4 billion, reflecting 72.9% market share; BMO AM is second with $9.3 billion and 16.4% market share, followed by Horizons ETFs with $3.8 billion and 6.7% market share. The top two ETF/ETP providers, out of 7, account for 89.3% of Canadian ETF/ETP assets, while the remaining 5 providers each have less than 7% market share.
Vanguard gathered the largest net inflows in January with $141 million, followed by Horizons ETFs with $109 million and BMO AM with $86 million net inflows. iShares experienced the largest net ETF/ETP outflows in January with $904 million, followed by RBC Global AM with $6 million.
S&P Dow Jones has the largest amount of ETF/ETP assets tracking its benchmarks with $28.9 billion, reflecting 51.0% market share; PC-Bond is second with $15 billion and 26.4% market share, followed by MSCI with $1.6 billion and 2.9% market share.
Note - $ refers to US Dollars in this press release.
