Canada's 2024 ETF Recap: A Year for the Record Books

Overview:

• Canadian ETFs in 2024 accumulated CA$75.5 billion in net* inflows throughout the year, surpassing the previous full- year record of CA$58 billion set in 2021 by a whopping 30%.
• Equity ETFs, fixed income ETFs (excluding cash) and mixed allocation ETFs achieved their largest inflows ever in Canada.
• Covered call ETFs had a banner year, bringing in CA$6 billion in inflows across both equity and bond ETFs.
• Canadian ETF providers launched a record-breaking 231 new ETFs.
• In December and for the first time, the Canadian ETFs market exceeded CA$10 billion inflows in a single month.
• Thanks to market gains and strong investor demand across various asset classes, Canadian ETF assets hit the CA$500 billion milestone.

*This report adjusts numbers to eliminate double counting arising from Canadian-listed ETFs investing in other Canadian-listed ETFs (aka net), unless otherwise stated. Data marked as "net" accounts for this adjustment, while "gross" figures represent totals without removing double counting.

The Canadian ETF market experienced a landmark year in 2024, breaking records in inflows, product launches and assets under management. As investors sought innovative solutions and diversified portfolios, ETFs continued to dominate, outperforming mutual funds and attracting widespread interest across asset classes. From the rise of covered call ETFs to the growing demand for active strategies, 2024 set a high bar for the future of the ETF industry in Canada.

The record flows and launches were largely driven by passive equity ETFs, which thrived in a backdrop of strong, broad equity markets. Target maturity bond ETFs and money market ETFs also gained significant traction throughout the year.

Milestones for Canadian ETFs in 2024

In total, Canadian ETFs accumulated $75.5 billion in net inflows (gross inflows: $89 billion) in 2024. Equity ETFs saw the largest inflows of $40.5 billion in the history of Canadian ETFs. Fixed income ETFs followed with $21.6 billion in inflows. Mixed allocation ETFs brought in $10.9 billion, with inflows spread throughout the year. Cash and money market ETFs recorded small inflows of $2.7 billion. Alternative ETFs posted $1.2 billion outflows as some investors switched to U.S.-listed Bitcoin ETFs.

Canadian ETF Flows in 2024 by Asset Class (Total: $75.5BN)

Canadian ETF Flows in 2024: Passive vs. Active

The ETFs

In 2024, issuers launched 231 new ETFs in Canada, a 12% increase compared to the 167 ETFs introduced in 2023. Most new ETFs were equity ETFs (123), followed by fixed income (76), mixed allocation (11) and alternative ETFs (11). These additions put the total number of Canadian ETFs at 1542 to close out the year.

Passive Equity ETFs Dominate

Passive equity ETFs dominated the Canadian market in 2024, with equity ETFs overall attracting $40.5 billion in inflows –54% of total Canadian ETF inflows for the year. Passive equity ETFs alone received $32.4 billion, accounting for 43% of total ETF inflows. These figures highlight investor's strong preference for risk assets throughout the year.

Covered Call ETFs Shine

With further rate cuts coming, most fixed income ETFs struggled to yield 5%; a level of which many investors have become accustomed. In contrast, covered call ETFs, which are less impacted by rate changes, emerged as attractive alternatives for yield-seeking investors. In 2024, equity covered call ETFs gathered inflows of $4.5 billion and bond covered call ETFs accumulated inflows of $1.4 billion.

Fixed Income Remains Popular

Traditional fixed income ETFs (i.e., cash and money market) overall gained significant traction in 2024 as many investors viewed them as reliable income sources and effective hedges against stock market volatility. As a result, fixed income ETFs had steady inflows throughout the year, totalling $21.6 billion. Aggregate bonds led with $14.0 billion in inflows, followed by IG corporate bonds with $6.0 billion. In contrast, preferred shares had the biggest outflows of $0.4 billion. In addition to mixed maturity fixed income ETFs, which accumulated $12.6 billion throughout the year, ultra short-term bonds gained the most traction among fixed income investors with total inflows of $2.5 billion.

Cash and Crypto

Regulatory changes impacted the ETF industry last year. Cash was king in 2023 until OFSI imposed stricter-than-adhered liquidity treatment rules for deposits, leading to $1.9 billion in outflows as lower yields made it less attractive. In the crypto space, the launch of U.S. Bitcoin ETFs in January 2024 prompted a shift among Canadian investors. Canadian-listed Crypto ETFs saw outflows of $1.4 billion in 2024 as many investors opted for U.S.-based Bitcoin ETFs instead.

Asset Allocation ETFs Shine

Asset allocation ETFs maintained their popularity in the Canadian ETF market with stable monthly inflows. These ETFs are especially attractive to retail investors by providing a one-stop shop for diversified investments. In 2024, these ETFs gathered $10.9B billion in new assets, driven primarily by strong equity market performance and demand for in all-equity portfolios.

ETFs Trump Mutual Funds Again

Similar to 2023, ETFs continued to dominate mutual funds in fund flows, recording a significant $53 billion advantage over the first eleven months of 2024. While Canadian ETFs gathered substantial inflows, mutual funds reversed their recent trend of net outflow by attracting $12.7 billion in net inflows during the same period. This marks a departure from the net outflows mutual funds experienced in 2023 and 2022. Given the increasing adoption of ETFs among investors, particularly among younger investors, this trend is likely to continue.

Active ETFs Remain Attractive

Although passive ETFs saw greater fund flows than active ETFs last year, active ETFs continued to gain momentum among investors. In total, active ETFs experienced $31.9 billion inflows, accounting for 42% of total inflows. This number was only slightly behind passive ETFs with total inflows of $43.7 billion (58% of total inflows). Despite this growth, active ETFs still represent just 31% of the Canadian ETF market's AUM, while passive ETFs account for 69%. Notably, 70% of new ETFs launched in 2024 were active ETFs, indicating increasing interest in active strategies. The trend is likely to continue in 2025 as more active fund managers entering the ETF space.

More Opportunities as ETF Offerings Continue to Evolve In 2025

The impressive performance of the Canadian ETF market in 2024 reflects its growing role as a cornerstone of modern investing. With innovation at its core and a clear shift in investor preferences, the ETF space is positioned for sustained growth. As we move into 2025, the continued evolution of ETF offerings promises even more opportunities for investors seeking efficiency, diversity and performance in their portfolios.