- Flows reached
$35 billion for the year inCanada with BMO ETFs leading the industry with new flows of$8.4 billion for the twelfth consecutive year1 - Inflation and rising interest rates dominated markets
In 2022, the Canadian ETF industry reached
"ETFs have proven their worth once again in 2022, both as effective portfolio building blocks, and as efficient trading tools to help investors make progress towards their financial goals." said Mark Raes, Head of Product, BMO Global Asset Management. "While we endured difficult markets in 2022, ETFs helped investors reposition around inflation, higher interest rates, and market uncertainty. ETFs that focus on areas of the market such as defensive factors, cashflow, and inflation protected bonds proved effective, while specialized equity ETFs are needed for future growth. Furthermore, we are pleased that BMO ETFs continue to lead the industry in new flows for the twelfth consecutive year.1".
Key Themes
Inflation:
- Consumer price index (CPI), while still well above long-term targets, is trending in the right direction.
- ETFs with exposure to certain sectors, such as inflation-protected bonds, energy and infrastructure, can offer investors a hedge against inflation.
Factors:
- Low volatility and dividend strategies proved effective in challenging markets.
- Mature cash-flow-generating equities delivered value with rising interest rates and market risk.
Sectors:
- BMO Equal Weight Oil & Gas Index ETF (ticker: ZEO) was the highest returning BMO ETF in 2022.1
- Canadian financial sector ETFs saw inflows of
$407 million for the year.1
Equity Growth:
- The rise of inflation has heavily impacted growth stocks as companies valued on future cash flows now face a higher discount rate and lower growth estimates.
- Cash on the sidelines could lead to significant opportunities for investors once markets turn positive.
U.S. Dollar strength helped Canadian investors with unhedged currency exposure.
Listed Real Assets:
- ETFs based on listed infrastructure equities combine the liquidity and efficiency of ETFs with exposure to infrastructure assets.
- Global infrastructure ETFs provided differentiated returns due to long-term contracts with built-in inflation pass-through mechanisms.
Fixed Income:
- A very difficult year for fixed income for both interest rates and credit may be seeing positive signals as fixed income markets have reset.
- A barbell approach to fixed income ETFs with short term credit ETFs and long-term government ETFs has proven popular with investors.
Balanced ETFs:
- The convenience of all-in-one, low-cost balanced ETF solutions appeals across investor types.
- Canadian balanced ETFs saw inflows of
$1.8 billion for the year.1
To view the full ETF Outlook Report, please click here.
Further information about BMO ETFs can be found at www.bmo.com/etfs.
1
The viewpoints expressed represents their assessment of the markets at the time of publication. Those views are subject to change without notice at any time without any kind of notice. The information provided herein does not constitute a solicitation of an offer to buy, or an offer to sell securities nor should the information be relied upon as investment advice. Past performance is no guarantee of future results. This communication is intended for informational purposes only.
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For a summary of the risks of an investment in the BMO ETFs, please see the specific risks set out in the BMO ETF's prospectus. BMO ETFs trade like stocks, fluctuate in market value and may trade at a discount to their net asset value, which may increase the risk of loss. Distributions are not guaranteed and are subject to change and/or elimination.
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BMO Exchange Traded Funds has been an ETF provider in Canada for more than 13 years, with over 100 strategies, over 25 per cent market share in
1 Morningstar, December 2022
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider - the 8th largest bank, by assets, in
SOURCE
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