Canada's 2025 ETF Recap: The Year of Asset Allocation ETFs

What You Need to Know:

• Canadian ETFs accumulated net* inflows of $122 billion throughout 2025, surpassing the prior full year record by a whopping 62%. Gross* inflows topped $154 billion, shattering the previous record in 2024.
• December set a new record for Canadian ETF inflows, exceeding $16 billion in a single month for the first time.
• Equity ETFs saw the largest inflows in the history of Canadian ETFs with $59 billion of new assets as both passive and active equity ETFs hit all-time highs.
• Asset allocation ETFs reached the largest inflows in Canadian history with $22.7 billion, more than double last year's $10.9 billion inflows.
• With 374 new ETFs coming to the market, Canadian ETF launches also hit a new record. Single stock ETFs were a highlight in the slew of new products for 2025.
• Canadian ETF assets hit the $700 billion milestone thanks to market gains and investors pouring money into ETFs across different asset classes.
• Just three ETF issuers made up 50% of inflows and 63% of total ETF AUM.

*Numbers in this report were netted to remove double counting arising from Canadian-listed ETFs that invest in other Canadian-listed ETFs (aka net), unless otherwise stated. Data marked as "gross" represents the gross numbers without removing double counting.

The Canadian ETF (exchange-traded fund) market achieved several record-breaking milestones in 2025, reflecting significant developments both in fund flows and product innovation. As a result, the year stands out as exceptional in the industry's history.

ETF Highlights

Record flows and launches were largely driven by passive equity ETFs, which benefited greatly from a backdrop of strong broad equity markets. In addition, single stock ETFs gained significant traction throughout the year.

Asset allocation ETFs were a key focus of 2025, experiencing record inflows of CA$22.7 billion and more than doubling inflows recorded last year. The notable expansion in asset allocation ETFs was largely attributed to increased interest in all-equity and growth portfolios.

Our detailed recap of 2025 in Canadian ETFs is outlined below:

By The Numbers

Overall, all asset classes had a good year in 2025. Canadian ETFs accumulated total net inflows of $122 billion in 2025 (gross inflows: $154 billion).

• Equity ETFs saw the largest inflows in the history of Canadian ETFs at $59 billion.
• This was followed by fixed income ETFs with total inflows of $30 billion.
• Asset allocation ETFs had total inflows of $22.7 billion spread throughout the year.
• Cash and money market ETFs had small inflows of $6.6 billion.
• Alternative ETFs posted $1.5 billion inflows driven by the crypto rally in the middle of the year.

The ETFs

Overall, we saw 374 new ETFs launch in Canada in 2025 compared to 231 new ETFs in 2024. This growth amounted to a 62% increase in ETF launches year-over-year. The majority of new ETFs were equity ETFs (234), but fixed income (70), alternative (44) and mixed allocation ETFs (16) also had a decent year of new launches. This puts the number of Canadian ETFs at 1,848 to close out the year.

Canadian ETF Flows (Total: $122 billion)

Canadian ETF Flows: Active Equity ETFs vs. Passive Equity ETFs

Passive Equity ETFs Lead

Equity was the asset class with the largest inflows of $59 billion last year, indicating investors' strong preference for risk assets. In fact, equity ETFs accounted for 48% of total Canadian ETF inflows in 2025. Among equity ETFs, passive equity ETFs received $39.3 billion, accounting for 32% of total ETF inflows.

Single Stock ETFs Stand Out

Single stock ETFs have been rising stars in 2025. In total, 80 singles stock ETFs came to the Canadian ETF market, which brings the total number of single stock ETFs to 105. These ETFs have accumulated $3.4 billion inflows, reaching total AUM of $3.9 billion.

The Year of Asset Allocation ETFs

In Canada, 2025 marks a tremendous success for asset allocation ETFs. These ETFs accumulated $22.7 billion, doubling the inflows in 2024. Total AUM reached $66 billion, representing 78% year-over-year growth.

Covered Call ETFs Shine

With further rate cuts coming, most fixed income ETFs are struggling to yield 5%, which many investors have become accustomed to. Covered call ETFs, as yielding assets less impacted by rate changes, have become attractive alternatives for yield-seeking investors. In 2025, equity covered call ETFs gathered inflows of $9.8 billion, and bond covered call ETFs accumulated inflows of $0.5 billion.

ETFs Outperform Mutual Funds Once Again

As observed over the last few years, ETFs and mutual funds demonstrated a notable divergence in flows, with ETFs surpassing mutual funds by $71 billion in total fund flows during the first eleven months of 2025. Notably, Canadian mutual funds registered net inflows of $38.6 billion for the same period in 2025, representing a threefold increase over 2024 levels. Although mutual funds continue to see inflows, the growing preference for ETFs, especially among younger investors, suggests this divergence will likely continue.

Active ETFs Gained 50% Inflows

Passive and active ETFs both saw $61.1 billion inflows this year, splitting the total ETF fund flows equally. It is worth noting that active ETFs only accounts for 33% of the AUM of the Canadian ETF market, while passive ETFs account for 67%. In addition, 67% of new ETFs launched in 2025 were active ETFs, indicating increasing interest in active strategies. The trend is likely to continue in 2026 with more ETF series of active mutual funds entering the ETF space.

2025 Key Takeaways

In 2025, passive equity ETFs remained the most popular investments due to the strong market rally. Fixed income ETFs, especially those focused on aggregate bonds and investment-grade corporate bonds, have become increasingly popular as investors' risk appetite grows. Meanwhile, money market ETFs are experiencing a resurgence as some investors prefer holding cash during periods of market uncertainty. As interest rates decline, yield-focused strategies like covered call ETFs have seen remarkable growth. Notably, single stock covered call ETFs are quickly gaining traction, with 80 new products and $3.4 billion in inflows in 2025.

Active ETFs maintain strong momentum in Canada; two-thirds of new ETF launches in 2025 were active, reflecting rising interest in these strategies. This trend is expected to persist as more active options are introduced within ETF portfolios.

The Canadian ETF industry experienced a strong year, reaching record inflows of $122 billion. December 2025 set a new monthly high for the market, with inflows totaling $16.3 billion. As more fund managers and strategies join the ETF space, Canadian ETFs are poised to see continued growth in 2026. While Canada's ETF market is valued at $712 billion – smaller than the $2.5 trillion mutual fund market – the rising popularity of ETFs, particularly among younger investors, is expected to gradually close this gap over the coming years .