Canadian ETFs Top $100B in Flows; AI, Education in Focus

The forum, hosted by BMO during a Market Close event at Cboe in Toronto, brought together ETF issuers, advisor distribution leaders and financial creators to review market trends and how investors use ETFs.

Panelists reported Canadian ETF net inflows exceeded $100 billion year-to-date, reaching that level earlier in the year than in prior cycles. Equity ETFs accounted for roughly 70% of demand YTD, while fixed income, commodities and alternative strategies showed rising interest as investors used ETFs to build full portfolios. Jennifer Lee, director of institutional ETF sales at CIBC Capital Markets, noted flows hit the $100 billion mark earlier than in previous cycles and said, ‘Investors are increasingly using ETFs as a tool to implement their investment decisions and help navigate uncertainty.’

Speakers described faster ETF adoption since the pandemic and a change in how providers reach and educate clients. Zayla Saunders, vice president of ETF online distribution at BMO ETFs, pointed to the growing role of financial creators in investor education. Erin Allen and Kevin Prins of BMO ETFs said pandemic-era volatility prompted more client questions about trading halts, circuit breakers and market mechanics, increasing issuers’ educational duties.

The forum addressed industries beyond software and semiconductors that could benefit from artificial intelligence. Jennifer Lee identified utilities and infrastructure — including power generation, energy networks and data centers — as potential beneficiaries of AI investment. Braden Dennis, who hosted a session on portfolio positioning, urged a distinction between long-term enthusiasm for AI and the valuations of individual companies and stated, ‘AI as a theme is not overvalued.’

Panelists discussed concentration risk in major equity benchmarks, where a small number of megacap technology stocks account for a large share of returns. Matt Montemurro, head of fixed income and equity index ETFs at BMO, said the market will begin to sort winners and losers as the AI cycle progresses and recommended strategies that spread exposure more evenly to manage concentration.

Commodities and gold were highlighted as areas of growing investor interest. Montemurro noted some advisors and institutions are treating gold as a longer-term allocation rather than solely a short-term hedge. Panelists cited a roughly $350 million single-day gold ETF purchase as an example of flows indicating shifts in investor behavior. Bipan Rai, head of ETF and alternatives strategy at BMO, mentioned infrastructure, gold and covered call strategies as areas likely to attract interest for income and diversification.

Speakers said ETF flows can serve as a market signal, showing where investors are directing capital. Kevin Prins recalled early skepticism about banks entering the ETF business, quoting critics: ‘A bank in the ETF business? Why would you do that?’ The forum concluded with calls for clearer communication, greater transparency and expanded investor support from ETF issuers as product use and digital engagement increase.