August 2023 Fund Flow Leaders
Gauging investor sentiment is a difficult task, particularly in an uncertain market environment. However, ETF fund flows can be a useful barometer in assessing sentiment and understanding investor behavior at a given point in time. In August 2023, the following five funds garnered the most net fund flows:
*Please note all leveraged and inverse oriented solutions were removed from the dataset utilized.
US Federal Reserve Chair Jerome Powell made it clear at the recent Jackson Hole symposium that interest rates would remain elevated for as long as needed by stating, “We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective”. The clear indication that rates will remain higher for a prolonged period means the continued upward trajectory of yields is likely to be top of mind for many investors, as such the Horizons US 7-10 Year Treasury Bond ETF (Ticker: HTB) garnering the most inflows for the month aligns with the growing desire for yield-focused solutions by investors.
With interest rates remaining elevated and the anticipation that they may go to go higher, the appeal of High Interest Savings solutions continues to be ever present in the minds of investors. In the month of August, the CI First Asset High Interest Savings ETF (Ticker: CSAV) and Horizons High Interest Savings ETF (TSX:CASH) (Ticker: CASH), garnered the third and fifth most flows, respectively, for the month. Low risk solutions of this nature will continue to be enticing to investors, should interest rates continue on their current trajectory.
The iShares S&P/TSX 60 Index (Ticker: XIU) and iShares ESG Aware MSCI Emerging Markets Index ETF (Ticker: XSEM) received the second and fourth most flows, respectively, for the month. Despite the equity markets being down broadly for the month, flows into these equity solutions were strong. Having broad exposure to equity markets has proven to be beneficial thus far in 2023, as the year-to-date performance of these mandates has been in positive territory.
August 2023 Performance Leaders
While monthly fund performance does provide a point-in-time look at how an investment strategy has fared in the moment, when taken into context with the prevailing economic environment, investors are able to understand the basis for its current results and assess how future macroeconomic developments will influence the strategy’s ongoing performance. In August 2023, the following five funds exhibited the highest performance:
*Please note all leveraged and inverse oriented solutions were removed from the dataset utilized
The Horizons US Marijuana Index ETF (Ticker: HMUS) and Purpose Marijuana Opportunities fund ETF (Ticker: MJJ) were the first and second top performing funds, respectively, for the month. Cannabis stocks were sinking during the month, but they exploded higher on August 30th on news that the US Department of Health and Human Services had recommended to the Drug Enforcement Agency (DEA) that it move cannabis from Schedule 1 to Schedule 3.Rescheduling cannabis to Schedule 3 would be monumental for state-legal cannabis businesses. Although rescheduling would not federally legalize the state-legal programs, it would eliminate the 280E tax burden, which explicitly prohibits businesses engaged in the trade or distribution of either Schedule 1 or Schedule 2 controlled substances from deducting expenses on their federal taxes, which currently applies to cannabis businesses.
The Horizons Global Uranium Index ETF (Ticker: HURA) had the third-best performance. The strong performance of the ETF stemmed from robust demand forecast and worries about the availability of nuclear fuel amid the chances of sanctions affecting Russia's nuclear fuel supply. The outlook on the uranium industry has been positive, due to growing interest in nuclear energy, which has led several developed nations to invest in new infrastructure projects while extending the operational life of their existing nuclear power stations. The ongoing energy issues and the requirement for dependable, environmentally friendly energy sources are helping in the sector’s upsurge.
The Horizons S&P/TSX Capped Energy Index ETF (Ticker: HXE) and iShares S&P/TSX Capped Energy Index ETF (Ticker: XEG) had the fourth and fifth best performance, respectively, for the month. Crude oil prices continue to remain elevated, primarily because of extended voluntary cuts to Saudi Arabia’s crude oil production and increasing global demand. As a result, these factors will continue to reduce global oil inventories and put upward pressure on oil prices in the coming months. Both ETFs reflect these macroeconomic changes occurring within the energy sector for the month.
This content was originally published by our partners at the Canadian ETF Marketplace.