ETF Trends from the RBC Capital Markets Trading Floor

January was a headline-driven month with countless events keeping investors actively involved. ETF trading volumes were higher than usual¹, as continuous news flow kept market dynamics unpredictable. Earnings season, a neutral Fed decision, a shake-up in the AI competitive landscape and US tariffs rounded out a very busy start to the year.

The ETFs that increased most in value in January were funds that focused on holding Gold Miners. The subsector had a double-digit return over the past month with Gold spot prices trading though the $2,800 level, representing a 7.5% price change and nearly 9% return in Canadian dollars.

US ETFs saw a punchy $92 billion of inflows in January, which was led by fund flows into Large-Cap US equities – continuing the broad trend of the past year. Trump’s inauguration and his crypto-friendly perception garnered additional flows into Crypto-backed ETFs, which saw an influx of $6 billion in new assets. Equity Premium Income or Covered Call ETFs are back on the ETF inflow leaderboard with indicating increased investor interest towards strategies that provide both extra yield and a level of downside protection.

In Canada, we saw investors follow the US lead and continued to add positions in US equity ETFs; nearly 40% of Canadian ETF net inflows in January were related to the accumulation of US stocks. We believe part of the appeal here is related to the USD and unhedged Canadian-listed ETFs benefiting from ongoing USD strength. Canadian investors were net sellers of their domestic stock market but still actively buying Canadian Fixed Income funds. We especially saw sustained interest in short-duration bond funds.

Drilling down into Factor and Sector ETFs, US Tech and US Growth were the preferred vehicle of play, and they continue to reign supreme from a flows perspective. Financials were the top performing sector with the anticipation that Trump will support favourable policies for the industry. Financial-sector ETFs in the US had $4 billion of inflows in January. Canadian banks, on the other hand, are facing headwinds and investors removed nearly $1 billion from Canadian bank ETFs.

Sources: 
^1. _{All data in this article is from Bloomberg LP Data is at January 31, 2025. Some data may be delayed as certain issuers are unable to provide same day reporting to Bloomberg. Values in CAD}