and on the iShares Canada front … (August flows / performance highlights)

Following on earlier posts looking at performance (and flows data) to August 31, 2021,

let’s now run through some information related to iShares Canada ETFs.

Top and Bottom 10 performing ETFs iShares Canada (for the month of August 2021):

Of Note:

  • India – Funny how the world works … (or not …), for I would bet that if anyone had been given the choice of investing in China versus India in the past (you name it: 1, 2, 3, 5 years …), I’d have been hardpressed to find someone arguing that India was the much better “bet”. And there you have it: as was the case with the BMO line-up, India also dominated the performance charts last month. More to come? OR, will India be more challenged once / if things settle down with regards to China? As far as August’s performance, according to Schroders, it was attributable to: “India’s stock market rally comes on the back of an ultra-easy monetary policy by the country’s central bank and the injection of a significant amount of extra liquidity to stimulate the economy following the Covid-19 crisis.”
  • Tech – Strong month for Technology last month (both Canadian and US), and by extension, for Momentum in the US.
  • On the negative side: on the flipside of that, Gold, Silver, and Materials exposure … not so much …
  • EM – Notable outperformance within EM ETFs – of RAFI EM and Min Vol EM, relative to both XEM and XEC …
  • US ESG leaders – neck and neck with S&P500 (again debunking notion that one has to “sacrifice” performance when going Responsible / ESG Investing).

Top and Bottom 10 Performing ETFs (iShares Canada – YTD to the end of August 2021):

Of note:

 

  • Beyond Energy (despite negative returns recently) and Tech, top performers included CDN REITS, as well as dividends and financial ETFs
  • XFN is over 400 bps ahead of the S&P/TSX 60 performance to the end of August. Does this explain significant outflows for XFN (-CAD 197 MM for August)? or do these outflows have to do with the Liberals’ proposed new COVID-19 related taxes on banks in particular?

as noted in relation to Minimum Volatility underperforming on a Global Basis (looking at the Vanguard ETF VVO), not all Min Vol performance was “inferior”. Specifically, as noted in relation to iShares above – EM Min Vol did better than Market Cap EM. Similarly for Canada, Min Vol has regained some relative performance in recent months, and is now neck and neck with XIU for the YTD performance numbers. As for other factors, XMM (Min Vol Canada) bested Growth, Value, dividend, and size (Small Cap) ETFs in August.

Sector-wise: EVERYTHING … has moved up significantly … with only S&P/TSX Energy at negative compounded returns over 3 and 5 years …

  • Notwithstanding strong YTD returns across sectors – performance dispersion not insignificant … Diversification “opportunity” in the event of meaningful shifts in markets against a transitioning backdrop (Re-open? or … Re-quarantined?)
  • Healthcare – as we learned during “Thematic” ETFs Investing Summit 2021 – Healthcare has both attractive defensive characteristics, as well as attractive thematic, and reopening tailwinds …
  • Global Industrials … reopening plays, as well as “automation” / AI and technology plays? = relative upside potential?

In terms of noteworthy Flows for August:

in big picture terms, iShares AUM looks to have risen by around CAD 4 Billion in August, consisting of CAD 2.7 Billion of inflows, and CAD 1.36 Billion of market gains.

  • largest inflows: XIU (+1.26 Billion =? Dividend “capture” month?)
  • S&P500 + CAD 674MM inflows
  • TSX composite – XIC: +CAD 391MM
  • EAFE – XEF:+CAD103MM

Outflows:

  • capped financials (XFN): -CAD197MM
  • capped Energy (XEG): -CAD 33 MM
  • Canadian Quality Dividend Index ETF (XDIV): -CAD12MM
  • XEC (EM Equities): -CAD7.7MM

Note: as “they” always say – past performance is no guarantee or indication of future performance … so keep that in mind. That said, “momentum” strategies hold on to the notion that aside from momentum in underlying “fundamentals”, price momentum (which obviously impacts performance … duh …) also has a tendency to remain in motion … until it stops being in motion … as such, it is always worth looking at performance data, whether in terms of getting a sense of relative performance, or whether looking to spot relative opportunities potentially arising from significant underperformance …

Good luck!