2020 was another year in which ETFs outpaced mutual fund sales in Canada. National Bank is out with their year-end review that showed a record year for ETF assets and for ETF sales. Not even the the first modern day pandemic could slow down the momentum for ETFs in Canada. And ETF investors were mostly well behaved in 2020, adding assets throughout the year. Here’s the Canadian ETF update for 2020.
The year’s Canadian ETF inflows reached $41 billion for the first time. That outpaced the record set in 2019 by an incredible 49%. And we finished the year with strength as we saw $4.3 billion in net sales for December. And in 2020 ETFs outsold mutual funds by an ever wider margin that in past years. ETF assets now total $257 billion, yes that’s over a quarter of a trillion dollars.
The asset flows for full year 2020.
We see Canadian ETF investors moving in monies with a bias toward International Equities, followed by the US and then Canada. Many Canadian investors are looking to correct their Canadian home bias. For total ETF assets (left side on the above table) we see that investors hold a near mix of Canadian, US and International equities.
With respect to risk level Canadians are in that Balanced Growth Sweet Spot. Investors are approximately two-thirds stocks and one-third bonds. It is also nice to see Canadian investors adding greater diversification by way of Gold and commodities-related ETFs.
I had addressed that subject in my latest MoneySense post.
Asset allocation portfolios – that’s the ticket.
And we see the continued strength of the the one ticket ETF portfolios. Those asset allocation portfolios are an absolute game changer. Canadian investors can say goodbye to their high fee mutual funds and say hello to globally diversified ETF portfolios with fees in the range of .20%. Have a look at the one ticket offerings from Horizons, iShares, BMO and the TD One Click Portfolios. Collectively they brought in almost $2.8 billion in 2020.
I used one of the Horizons offerings in 2020 for one of my wife’s accounts. I’ve added in some gold ‘stuff’ and bitcoin to round things out. 🙂
ESG ETFs also saw some strength in 2020.
To be honest with you, I’d rather see more impact investing on the environmental front. Many of the ESG (environmental, social and corporate governance) offerings merely avoid prolific polluters, compared to embracing clean technologies and producers. I’ll be back soon with a post covering some truly green portfolio ideas.
ETFs are getting more active.
ETFs that combine lower fees with active management are also gaining ground.
Cut The Crap Investing readers responded positively to Horizons HAL, an actively managed dividend ETF that employs AI. And Canada’s best performing REIT, CI First Asset RIT is also actively managed. You’ll see from that post that it was well positioned for the pandemic, a period that was and is very challenging for the REIT sector.
Looking at the top 20 ETF providers in Canada we see that iShares still leads the way. We’ve been watching and waiting for BMO to take the lead, but that has not happened as of yet. BMO continues to close the gap.
Onwards and upwards in 2021.
There are certainly more good things to come in 2021 for the Canadian ETF industry thanks to wider adoption by retail investors, plus advisors and planners.
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It’s time to support fellow blogger Mark Seed of My Own Advisor who has launched a new online venture – Cashflows and Portfolios.
The site will deliver tools and the how-to’s on how to manage personal cash flow and then how to design and create and manage your own portfolio.
Here’s the wonderful weekly wrap in the Sunday Investor Newsletter. In addition to the weekly asset roundup, The Sunday Investor takes a look at a US Dividend Growth strategy.
On MoneySense Larry Bates looks at the wealth formula for investment success.
And on the topic of MoneySense, here’s my latest weekly column that looks at the potential for an inflationary environment, plus a bullish look on oil and natural gas.
On lowestrates.ca the cheapest cars to insure in Canada. We found out the hard way that a Toyota Rav4 was not on the cheap side. Also, we were used to insuring older vehicles. It’s a whole new ball game when you purchase or lease a brand new vehicle. Factor that in to any purchase decision.
Milliondollarjourney offers an outline of Canadian online banks.
Related post: Make your cash work a lot harder at EQ Bank.
And Jonathan Chevreau looks at retirees recovering from GIC sticker shock.
This week on Cut The Crap Investing I looked at the new Tangerine Global ETF Portfolios.
On stocktrades.ca Dan looks at the difference between index funds and ETFs.
Bankeronwheels looks at the art of portfolio rebalancing.
Mike The Dividend Guy looks at what a dividend investor might buy in 2021.
The cure for the economy.
The wild card in 2021 is the vaccine delivery and rate that we can get those jabs in arms. John Mauldin looks at vaccine delivery, the raging pandemic and economic scenarios in the grip tightens.
Until we reach that ‘herd immunity’ please stay home except for essential trips and exercise with household members. I see the effect of the pandemic when I visit my Mom’s retirement home – now in outbreak. It is a scary scene to walk by the rooms, many with the COVID notices taped to the doors.
Please be safe and considerate. Save Our Seniors.
Help yourself, support Cut The Crap Investing.
While I do not accept monies for feature blog posts please click here on the mission and ‘how I might get paid’ disclosures. Affiliate partnerships help me pay the bills for this site. That will allow me to keep this site free of ads, and hence, easy to read.
Check out EQ Bank for those who want to make their cash work a lot harder. The current high interest savings account rate is 1.5%. EQ Bank recently introduced RRSP and TFSA accounts with a rate of 2.3%. You’ll also find GICs.
In 2021, those Robo Advisors are still the answer for the majority of Canadians stuck in high fee mutual funds.