Investors poured money into exchange-traded funds focused on Canadian equities last week at a rate not seen in four years.
ETFs holding primarily Canadian stocks saw net inflows of $2.5 billion (US$1.8 billion) between April 7 and 11, the most since May 2021, data compiled by Bloomberg show. The surge comes after U.S. President Donald Trump’s April 2 announcement of so-called reciprocal tariffs on 185 countries and territories.
Canada was spared those tariffs, but is subject to levies on autos, steel, aluminum and products that don’t comply with the North American trade deal.
Canadian investors, who tend to be overweight U.S. stocks, want to reduce those holdings amid market uncertainty and the trade spat, Bloomberg Intelligence ETF analyst Athanasios Psarofagis said. He attributed the interest in domestic equities to a blend of patriotism and dip-buying.
“Canadian investors are just annoyed with the U.S. They’re like, ‘Forget that. I’m not buying U.S. with what’s happening now; I’d rather just buy Canadian stocks,‘” Psarofagis said. The sentiment is the latest evidence of a “Buy Canada” movement, where Canadians have sought domestic options for everything from produce to pension investments.
Philip Petursson, chief investment strategist at Winnipeg, Manitoba-based IG Wealth Management, has also seen backlash against U.S. holdings.
“There are many clients that are saying, ‘I want to sell all my U.S. positions’ because they don’t like what’s going on and they don’t want to be associated with it,” he said. “We’re advising against that, but clients are starting to see the opportunities elsewhere around the world, and it’s not that the U.S. is the only game in town.”
The week of April 7 “saw some of the most active days ever in the ETF space,” Derek Benedet, a portfolio manager at Purpose Investments, wrote in a note. The three highest days of ETF trading volume in Canada occurred during that period, according to his calculations.
Net inflows for U.S.-focused equity ETFs were also up that week, but it was only the third-highest weekly flow this year, according to data compiled by Bloomberg.
Bloomberg Intelligence expects faster earnings growth among S&P/TSX firms than S&P 500 companies in 2025, and Canadian equities have lower multiples than their U.S. counterparts. Interest rates are lower in Canada than the U.S., meaning the tariff-driven downturn in equity markets made Canadian stocks especially well-positioned to steal flows from bond and cash funds.
The world’s first ETF launched in Canada in 1990, and the vehicles are “really embedded deep” in local investing culture, Psarofagis said. After Trump’s many tariff announcements targeting the country, “I think it’s not really a coincidence that you’re seeing a record on flows in Canadian exposures.”
Curtis Heinzl, Bloomberg News
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