According to the Canadian ETF Association (CETFA), Canadian-listed exchange traded funds continued to show strong sales for the fourth quarter of 2011 (Q4). The latest Quarterly ETF Asset Flow Report shows that the Canadian ETF Industry had nearly CAD3 billion in net new sales during Q4, finishing 2011 with more than CAD7.6 billion in net new sales.
Despite difficult market conditions in 2011, strong sales helped Canadian ETF assets grow by nearly 13 per cent to slightly more than CAD43.1 billion.
Each quarter the CETFA compiles the sales data for the entire Canadian ETF industry. In order to determine net sales, the CETFA looks at the amount of money that is used for net creations, or the creation of new ETF units. If any ETF experiences net creations, it means more units of that ETFs are being bought than sold. If the industry is in net creations, positive sales are occurring. If it is in net redemptions, money is flowing out of the industry.
While sales were diversified across a broad spectrum of categories, the top10 asset gathering ETFs in Q4 accounted for 87 per cent of the net creations for the quarter.
The CETFA found that ETFs that paid regular income distributions accounted for more than CAD4.4 billion in net creations during 2011, continuing a strong trend amongst Canadian investors for yield-seeking ETFs. Six of the top 10 asset gathering ETFs for Q4 were income-focused ETFs.
Amongst the asset classes, the Fixed Income ETF asset category saw the largest inflows both throughout the year and Q4. There was approximately CAD3 billion in net creations in fixed income ETFs during 2011, with CAD1.4 billion in net creations occurring in Q4 alone.
Covered Call ETFs, which make regular income distributions, also saw strong inflows, with more than CAD1.2 billion in net creations flowing into these ETFs during 2011. The Specialty ETF asset category, which includes covered call ETFs, accounted for CAD296 million in net creations during Q4. In fact, the most successful ETF launch in 2011 in terms of sales was a covered call ETF, the BMO Covered Call Canadian Bank ETF, which generated CAD703 million in net creations throughout the course of the year.
New money into Canadian Equity ETFs during 2011 amounted to CAD1.3 billion of net creations, with CAD595 million of that coming in Q4. Of those Q4 sales, CAD558 million flowed into just one ETF, the iShares S&P/TSX 60 Index Fund.
The Dividend Equity and Sector Equity asset classes also saw strong inflows during Q4. Net inflows into Dividend Equity increased CAD112 millions during the course of Q4, while Sector Equity ETFs earned even twice that with more than CAD240 million in net creations during the same period.