Investors pumped unprecedented amounts of money into Canadian exchange-traded funds (ETFs) in 2025, with equity funds dominating, according to new data from National Bank of Canada capital markets.
Of particular note are asset allocation funds, where inflows “exploded” to $21.7 billion, double those in 2024, says the National Bank report, authored by Daniel Straus, Tiffany Zhang and Linda Ma. All-equity asset allocation ETFs accounted for nearly half that amount — about 16 per cent of total equity inflows during the year.
“Demand for this category accelerated month after month in what appears to be a self-directed investor phenomenon,” the report said.
One of those funds, the iShares Core Equity ETF Portfolio (XEQT.TO) — which bundles Canadian, U.S. and international index ETFs into a single portfolio — had the highest inflows of any ETF in 2025, the first year a fund in this category has done so. National Bank notes that Vanguard’s All-Equity ETF Portfolio (VEQT.TO) and Fidelity’s All-in-One Equity ETF (FEQT.NE), both similar products, “also climbed the leaderboard.”
Overall inflows into Canadian ETFs hit $125 billion in 2025, up 64 per cent from the previous record set in 2024. Annual records were also broken for asset growth, new launches and overall volume.
The data underscore the widening gap between ETFs and other investment vehicles. For the fourth consecutive year, ETFs outsold mutual funds, gathering $125 billion compared to just $40 billion inflows to mutual funds. At the end of 2025, ETFs accounted for 22 per cent of assets under management in funds.
“[I]nvestors didn’t de-risk entirely despite the market turbulence; instead, we saw Canadian ETF investors start to explore opportunities elsewhere,” the report said. “ETFs focused on broad developed markets, the global region and emerging markets all enjoyed percentage flows much higher than those of both the U.S. and Canada.”
Ultimately, international, global, and emerging-market equity ETFs combined took in $33.2 billion in 2025, roughly matching U.S. and Canada equity inflows.
While equity funds saw unprecedented demand, fixed income ETFs also posted record numbers, pulling in $37.3 billion — a 55 per cent increase over the previous year. The report suggests that institutional giants accounted for some major shifts. A significant portion of the year’s activity was driven by large block trades “appearing to rotate from broad or federal exposures to ETFs focusing on corporate credit.”
Canadian investors also showed an increasing appetite for leverage. The report notes a surge in “lightly levered” ETFs — products that use modest cash leverage (typically 25 to 33 per cent) to amplify returns. These funds accounted for 97 per cent of the $6 billion that flowed into the broader leveraged and inverse category. The report warns, however, that while such products can offer “a tantalizing yield,” that may “come with lower capital performance … and actual total returns may come in lower than a plain vanilla investment without any option overlay.”