High-Interest Savings Account ETFs and Money Market Funds Lead July Inflows
In July, high-interest savings account exchange-traded funds (ETFs) and money market funds attracted significant inflows, with a total of $875 million pouring into these investment options. According to a report from National Bank, CI Global Asset Management and Horizons ETFs Management (Canada) Inc. were among the leaders, with their savings account ETFs each bringing in more than $200 million. However, there were also notable performers in the form of newer cash management and money market funds from Purpose Investments Inc., Horizons, and Guardian Capital LP.
An interesting trend that the report highlighted was the surge in the availability of money market ETFs. These products invest in short-term securities, such as Treasury bills and commercial paper. This year alone, nine new products in this category were launched, indicating a response to a favorable rate environment and a regulatory review of bank deposits underlying the popular cash alternative ETFs.
The influx of funds into these cash-like investments continued to be robust, as the year-to-date flows accumulated to $6.5 billion by the end of July.
Apart from savings accounts and money market funds, Canadian corporate bonds also saw notable inflows. The BMO Ultra Short-Term Bond ETF attracted $446 million in July, reinforcing the demand for fixed-income options.
On the equity side, Canadian ETFs outperformed other regions, with $487 million in inflows. In contrast, U.S. ETFs experienced redemptions during the same period. The report highlighted that equal-weighted products in the U.S. market performed better than market cap-weighted ones. This suggests that investors were looking to diversify and avoid overexposure to mega-cap technology companies.
The July inflows further boosted the year-to-date total, bringing it to $22.7 billion. This reflects the continued investor interest and confidence in ETFs and other investment options in the market.
In summary, high-interest savings account ETFs and money market funds dominated July’s inflows, attracting substantial investments. The emergence of new money market ETF products and the favorable rate environment contributed to this trend. Alongside these options, Canadian corporate bonds and Canadian ETFs also saw notable inflows, while U.S. ETFs experienced redemptions. The overall picture indicates a preference for diversified investments and the ongoing popularity of ETFs as attractive investment choices.
