Equity funds were the biggest beneficiaries of RRSP season, a contrast to last year when more cautious investors sought shelter in cash products.Investors put their money in international equity exchange-traded funds during this year’s registered retirement savings plan season, betting that interest rates would ease and markets outside of Canada – in particular, the U.S. – would see the biggest gains.
Last year, investors all but ignored equity ETFs in favour of investing $2.2-billion in fixed income and cash alternative ETFs to take advantage of higher interest rates. U.S. equity ETFs saw outflows of $273-million during the 2023 RRSP season, while international equity ETFs gained $833-million and Canadian equity ETFs added $68-million.
“In early 2023, scarred RRSP contributors probably looked toward ultra-safe investments outside the ETF ecosystem such as , and the ETF flows reflected their tentative attitude. In contrast, 2024′s early-year inflows were the highest in recent history.” Big topics included hot technology stocks, along with fixed income and GICs that continue to have attractive rates of 5 per cent or more, Ms. Del Greco says. “If you can get 5.5 per cent with a conservative, zero-risk investment, that’s a meaningful contribution,” she says, particularly in a tax-deferred vehicle such as an RRSP.
In late 2023 and into 2024, Ida Khajadourian, portfolio manager and investment advisor with Richardson Wealth Ltd. in Toronto, started advising clients to move funds from cash or fixed income back into equities.