ETF Demand Remains Near Record Highs in April 2015

ETF flows remain historically robust during April 2015. Net inflows for long term ETFs totaled $1.03bn during April versus the 12-month moving average of $1.2bn. For calendar 2014, total net flows of long term ETFs stood at $10.1 n vs $5.0bn in 2013 and $11.9bn in 2012. For calendar 2015 we estimate net flows of about $14.3bn and $13.0bn on a rolling 12-month basis through April 2016.

Excluding the iShares XIU ETF (a volatile vehicle that we believe is affected substantially by institutional investors) long term ETF demand in April 2015 stood at a near record $1.9bn and compares with the 12-month moving average of $1.4bn. For 2014, net demand for this aggregate stood at $11.6 bn vs $6.1 in 2013 and $11.2bn in 2012: for 2015 we estimate net demand of about $15.8bn. (For April, net flows for the iShares XIU stood around -$871mn with a 12-month total of -$2.4bn. Since 2009, the XIU has had a cumulative net outflow of $4.0bn. Note that in the accompanying graphic about market share, we make this instrument its own line item.)

International Equity was the demand leader during April with net inflows of $444mn versus the 12-month total of $1.5bn (see Tables # 6 and #7). Canadian Fixed Income was in second place during April with net flows of $424 mn and $1.96 on a 12-month basis. US Equity ETFs are the leader at the 12-month level with net flows of $4.0bn followed by Canadian Fixed Income at $1.96bn and Canadian Short Term Fixed Income at $1.9bn. (The top ETFs by net demand during April are set out in Tables #8 and #9.)

As of April, the ongoing resurgence of the underlying iShares brand which excludes Claymore and the XIU (Chart # 14) remains noteworthy. Specifically, iShares posted net flows of about $594 mn and has generated 12-month total flows of about $4.1bn which compare with 12-month net flows of -$814mn as of April 2014. This is a huge net swing. Comparably, Horizons ETFs generated net flows of about $47mn during April and the latest 12-month total of $554mn represents a significant swing from -$1mn as of April 2014 (Chart # 18).

In summary, strong underlying ETF demand remains in place as 2015 unfolds. Some of this demand strength may coincide with RRSP season as mutual fund demand has also been historically brisk during Q1. Nevertheless, our expectations are that the best aggregate demand for a while is now being seen and some leveling out or cooling down will tend to be the case heading through the rest of 2015.

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