An expert in exchange-traded-funds (ETFs) says Canadian investors are on pace to allocate a record amount of capital to ETFs this year.
Valerie Grimba, director of ETF sales and strategy at RBC Capital Markets, told BNN Bloomberg in a Tuesday interview that data for July suggests Canadians are increasingly interested in ETFs, particularly ones tied to U.S. equities.
“July was another strong month for (ETF) flows; it’s kind of following on a big year for 2024 actually, we’re on pace to hit the highest level of ETF fund flows ever, surpassing 2021’s record,” she said.
“What we’re seeing is a lot going on in the macro backdrop, obviously, and people are using ETFs as a vehicle to put their money to work.”
Grimba said that many Canadian investors remain interested in big technology names, which have driven U.S. markets for much of this year.
“(Tech) still is the dominant story, I like to say it’s kind of like a black hole, this gravitational force pulling everyone towards U.S. equities,” she explained.
“Canadian ETF flows have been primarily into U.S. equity funds, so we’re kind of seeing Canadian investors follow that gravitational pull.”
Grimba said that even during last week’s abrupt selloff in U.S. stocks, Canadian-listed S&P 500 ETFs still saw strong inflows, suggesting that many Canadian investors were “trying to buy the dip.”
She added that seeing such strong ETF interest in a typically slower summer month like July is indicative of the changes taking place in the Canadian investing landscape.
Grimba said a possible reason for the rise in popularity of diversified investments such as ETFs is a feeling of uncertainty amid the current global geopolitical and economic backdrop.
“The path isn’t clear … obviously there’s a lot going on geopolitically, elections, the rate-cutting cycle – there’s just a lot of gyrations happening under the surface,” she said.
“So, investors are trying to get ahead, and I think we’ll continue to see that happen as events unfold from here.”