Soon-to-launch funds south of the border set to appeal to Canadian investors
The Canadian ETF market is booming, with an avalanche of inflows and rapid expansion in new product launches across the sector.
Canadian ETFs absorbed a record $56 billion in inflows in the first half of 2025, marking the highest intake ever recorded for a six-month period according to a report from TD Securities.
Equity funds dominated the activity, while fixed income, money market, and mixed allocation ETFs also continued to attract steady demand from both retail and institutional investors.
The pace of new product creation remains brisk with, on average, about 1.4 new Canadian ETFs introduced each trading day this year, illustrating how rapidly providers are expanding shelf space to meet investor appetite. The report also highlights that US markets have experienced an even faster pace, with roughly 3.8 ETF launches per trading day.
Active strategies and niche income solutions have become a particularly strong force in the market.
Covered-call funds, short-term bond ETFs, and alternative exposures are capturing attention from investors seeking more resilient yield in what remains a volatile economic backdrop. While passive index-tracking ETFs still command significant scale, active ETFs are stepping into a much larger role within Canadian portfolios.
However, TD Securities cautions that US-listed “share-class ETFs” could soon emerge as serious rivals and the introduction of these products south of the border could accelerate a competitive shift by enabling well known US fund providers to offer ETF structures tied to existing mutual funds, many of which are popular among Canadian investors.
That could potentially pull assets away from home-market providers, especially in active strategies that have helped fuel Canada’s ETF growth trajectory.
Despite this pending challenge, the report notes that Canada still holds key advantages, including regulatory consistency, currency-hedging flexibility and tax considerations that may continue to support strong domestic participation. Nevertheless, advisors and investors are being urged to evaluate product structure, foreign exchange implications and market rules carefully as the product universe evolves.
