Can you believe that 2023 is already more than halfway over? It seems like only yesterday when tech stocks and bonds were in full meltdown amidst rising interest rates and high inflation and calls for a recession were on the horizon. Yet, the current year has been marked by a resurgent tech sector and a cryptocurrency revival. Who would have guessed?
As we cross the mid-year mark of 2023, I think it's an opportune time to take stock of trends within the Canadian ETF landscape. Leveraging Trackinsight's proprietary fund data, I'll be analyzing the most sought-after Canadian ETFs, based on which ones have the highest year-to-date inflows as of July 17, 2023. That is, what have Canadian ETF investors been buying the most?
Understanding the flow of investments into ETFs can provide key insights into broader market trends, investor sentiment, and even the economic outlook. This information can be a vital tool for investors as they assess their strategies, identifying investment opportunities that align with prevailing market dynamics, or perhaps ones that could support a contrarian view.
For Canadian ETF investors out there, tools such as the Cboe ETF Screener enhance the ease, accessibility, and efficiency of this analysis. This platform provides a comprehensive overview of ETFs, enabling users to search and filter based on various parameters, such as theme, asset class, or sector.
Horizons High Interest Savings ETF (TSX:CASH)
Coming in third place in terms of year-to-date inflows is CASH, and there's no surprise there. One of the few winners in the aftermath of the Bank of Canada's spate of aggressive interest rate hikes were high-interest savings account, or HISA ETFs.
These ETFs are as safe as it gets, albeit not risk-free. By holding their assets in HISAs with large Canadian banks, they provide safety of principal and insulation from market volatility. Best of all, their yields rise in lockstep with prevailing interest rates. As of July 13, 2023, CASH is paying a 5.41% gross yield.
Sure, you can get similar yields with GICs, but ETFs like CASH have no lockup period, and can be bought and sold intra-day with high liquidity in all account types. Unless your brokerage blocks their purchase, these ETFs are very accessible. They also come at a low cost, with CASH charging a 0.11% expense ratio.
Year-to-date inflows: $1.47 billion.
iShares ESG Aware MSCI Emerging Markets Index ETF (XSEM)
This one came as a total surprise to me, given the relative unpopularity of emerging market and ESG ETFs, let along one that combines both. Somehow, XSEM has attracted the second highest ETF inflows year-to-date, and is currently sitting at just over $2 billion in assets under management (AUM).
This ETF tracks the MSCI Emerging Markets Extended ESG Focus Index, which aims to match the risks and returns of the MSCI Emerging Markets Index but with a ESG screener. This involves screening out nuclear weapons, firearms, tobacco, coal, oil, and UN Global Compact violator companies.
With a 0.31% expense ratio, this ETF is priced similar to most emerging market ETFs. Currently, XSEM's largest geographical exposures are China (28.95%), Taiwan (16.88%), and India (13.17%) respectively. The ETF also includes 12.78% to South Korea, a country competitor FTSE classifies as developed.
Year-to-date inflows: $1.91 billion.
CI First Asset High Interest Savings ETF (CSAV)
The Canadian ETF with the largest year-to-date inflows is CSAV, which is a direct competitor to CASH. Like CASH, CSAV invests in HISAs with Canadian banks, aiming to provide investors with preservation of capital and steady income that moves in lockstep with prevailing interest rates.
This ETF has grown significantly. As of July 17, 2023, CSAV's AUM sits at some $7.65 billion, which is considerable for the Canadian market. I attribute this to CI Global Asset Management's brand name recognition and strong marketing efforts.
Right now, CSAV is paying out a gross annual yield of 5.36%. After accounting for a 0.16% expense ratio, investors are left with a net yield of 5.20%. A big draw of this ETF is the monthly distributions, which can help for those needing steady cashflow while ensuring safety of principal.
Year-to-date inflows: $2.36 billion.
This content was originally published by our partners at the Canadian ETF Marketplace.