Investors Shift from Thematic to Standard ETFs

In September, mutual fund net sales in Canada fell significantly to $790 million from $2.4 billion in August, largely due to equity funds experiencing $630 million in net redemptions. Conversely, ETF sales surged to $5.5 billion, driven by strong performance in equity and bond ETFs. While mutual funds showed signs of struggle, assets under management increased to $2.19 trillion, bolstered by market gains. In a broader trend, investors are shifting from thematic ETFs focused on sectors like AI and robotics, which faced $5.8 billion in net outflows this year, towards conventional ETFs linked to major stock indices, which saw inflows of $170 billion. This shift is attributed to the robust performance of the S&P 500 and Nasdaq 100, up over 22% this year, making it difficult for niche themes to compete. Overall, the market is witnessing a recalibration of investment strategies as investors seek stability in traditional funds amidst fluctuating thematic interests.