Investors’ appetite for Canadian exchange-traded funds (ETFs) in January extended momentum from a record-setting 2024, according to new data from National Bank of Canada Financial Markets.

Inflows into Canadian ETFs totalled $8.8 billion in January, with all asset classes except for Canadian equities seeing positive flows. U.S. equity funds dominated, with $3.3 billion in inflows, many of them currency hedged.

“ETF investors may be taking [foreign exchange] profit off the table by switching to currency-hedged ETFs, expecting a possible reversion to the mean in the CAD/USD exchange rate,” National Bank’s January ETF report notes.

The January inflows are more than double those from January 2024 and the fourth-highest amount in the past 12 months, in line with a general trend of ETFs' soaring popularity.

The top three ETFs for inflows in January according to the National Bank report were Vanguard’s S&P 500 Index (VFV), iShares Core Equity ETF Portfolio (XEQT), and Global X’s High Interest Savings (CASH).

Canadian equity ETFs collectively saw a net outflow of $860 million last month, with financial and energy sector funds dominating. "Amid heightened volatility, money market ETFs reclaimed their popularity with the largest monthly creation going back six months," at $1 billion, the report adds.

2024 saw records set for Canadian ETF assets and net sales, according to year-end data from the Investment Funds Institute of Canada (IFIC) released Friday. ETF net sales reached $75 billion in 2024, IFIC’s report says, “more than the previous two years combined.” ETF net assets as at the end of 2024 totalled $518 billion, a 35.5 per cent year-over-year increase, which IFIC says was driven by positive net sales and a positive market effect.

Though growing rapidly, net Canadian ETF assets are still dwarfed by mutual fund assets, which totalled $2.242 trillion in 2024, up 15.7 per cent over the previous year. Mutual fund net sales, however, at $15.2 billion in 2024, were around one-fifth ETF net sales and marked the first year of net positive inflows since 2021.

The pace of ETF fund creation in 2024 mirrored investors’ hunger for the asset type, with 117 new ETFs launched in Canada, bringing the total to 1,243, IFIC says. Mutual funds saw a lower net creation, with 14 funds added, bringing the total to 3,398.

National Bank data show ETF launches have not slowed in early 2025, with 25 funds launched last month, among them “single stock ETFs, target maturity ETFs, bitcoin ETFs, an all-weather ETF under the risk parity framework, [and] actively managed ETFs.”