Surge in Canadian ETF Investments in 2025
In 2025, Canada saw an unprecedented influx of investment into exchange-traded funds (ETFs), particularly in equity funds, as reported by the National Bank of Canada Capital Markets.
Notably, asset allocation funds witnessed a remarkable doubling of inflows to $21.7 billion compared to 2024. This surge was detailed in a report authored by Daniel Strauss, Tiffany Chan, and Linda Ma. Remarkably, almost half of that figure came from all-equity asset allocation ETFs, which made up about 16 percent of total equity inflows for the year.
The report stated, “Demand for this category accelerated month-on-month due to what appears to be a self-directed investor phenomenon.”
Among these funds, the iShares Core Equity ETF Portfolio (XEQT.TO) led the way, experiencing the highest inflows of any ETF in 2025—marking a first for this category. The National Bank also noted that similar offerings like Vanguard’s All-Equity ETF Portfolio (VEQT.TO) and Fidelity’s All-in-One Equity ETF (FEQT.NE) made significant strides as well.
Overall, Canadian ETFs attracted $125 billion in inflows for 2025, representing a 64% increase from the previous year’s record. This year also set new benchmarks for asset growth, new launches, and transaction volumes.
This data really emphasizes the widening chasm between ETFs and other investment options. For the fourth consecutive year, ETFs outpaced mutual funds, pulling in $125 billion compared to the $40 billion that mutual funds attracted. By year’s end, ETFs held 22% of the total assets under management.
The report indicated, “[I]Despite the market turmoil, investors did not completely avoid risk. Instead, we saw Canadian ETF investors begin to seek opportunities elsewhere. ETFs focused on broad developed markets, global regions, and emerging markets all enjoyed a much higher percentage of flows than both the U.S. and Canada.”
International equity ETFs, global equity ETFs, and emerging market equity ETFs combined saw inflows of $33.2 billion in 2025—about on par with the equity inflows in the U.S. and Canada.
While equity funds experienced this unprecedented demand, bond ETFs also reported significant figures, raising $37.3 billion—a 55% increase from the previous year. The report pointed out that substantial changes were influenced by large institutional investors. A noteworthy portion of this year’s activity stemmed from major block trades that seemed to indicate a shift away from broad or federal government exposures towards ETFs focused on corporate credit.
Moreover, Canadian investors appeared to show a growing interest in leverage. The report highlighted the rise of “lightly leveraged” ETFs—those employing moderate cash leverage (usually 25 to 33 percent) to amplify returns. These funds accounted for a staggering 97% of the $6 billion flowing into the broader leveraged and inverse category. However, caution was advised; while these products can provide “attractive yields,” they might carry risks of lower capital performance, making total returns potentially less favorable than regular investments without such strategies.
