ETF Trends from the RBC Capital Markets Trading Floor – October 2026

October was a month for the energy bulls and a tough month for those overexposed to Tech. Crude oil prices pushed higher through the month, and the knock-on effects were felt across equity markets, bond markets and investor positioning in ways that made for an interesting month to navigate. Unlike September – where the oil price spike triggered inflation panic and sent both stocks and bonds falling in tandem – October's energy rally was more orderly. Canadian equities had a genuinely good month with TSX60 leading the way and returning +2.8% in October, a meaningful outperformance versus the US, buoyed by this strong rally in the Canadian energy sector.  

In contrast, the S&P 500 finished the month down -1.1% while the tech-heavy Nasdaq-100 dropped -6.9% at the end of the month. The final week of October crystallized what had been building all month. Big Tech earnings disappointed, and markets punished the sector swiftly with the Nasdaq selling off sharply in the last trading session of October, compounding what was already a bruising month for growth and technology exposure. The Fed held rates steady at its October meeting, but the decision offered little comfort: persistent inflation concerns continued to weigh on sentiment, and the market read the hold as a signal that cuts remain a distant prospect. Against an evolving geopolitical backdrop and with investors eyeing the outcome of the midterm elections, risk appetite faded into month-end.

How did this translate to the world of ETF buying and selling? Well, it was a busy and active month overall. US ETFs pulled in over $200 billion, making this the biggest month for ETF fund flows so far in 2026, and the second largest inflow of all time! Canadian ETFs also attracted near-record-setting fund flows of $22 billion. Classic dip-buying behavior was alive and well. State Street Technology Select Sector SPDR ETF (XLK) attracted $1.7 billion of inflows despite falling -9.3% and Semiconductor ETFs at large added $17 billion of new capital as they lost over -20% in value this past month. These investors clearly believe in the long-term AI trade and are willing to average down through the pain. Health Care Select Sector SPDR ETFs (XLV) pulled in $1.6 billion and Energy Sector SPDR ETFs (XLE) added $1.9 billion, confirming the rotation into defensives and energy was not just a price story for investors, but a conviction buy as well.

Meanwhile, gold had a rough month. The price of physical gold fell -7.1% and saw $1.8 billion of outflows. This is a notable reversal after global gold-backed ETFs had attracted a record $31 billion in the quarter prior (Q3 2026). Bitcoin ETFs also stumbled as the price action for most cryptocurrencies in October was negative. After $3.5 billion of inflows in August and $2.7 billion in September, Bitcoin ETFs recorded -$550million of net outflows in October, snapping its multi-month inflow streak.

The bond market was volatile and directionally inconsistent in October, which made it a fascinating month for fixed income ETF flows. The month opened with a historic surge as US bond ETFs recorded a weekly record of $28 billion of inflows, led by strong investment into investment grade credit like LQD and VCIT. In terms of specific ETF flows, LQD was the single largest flow recipient of any ETF in October, pulling in $4.1 billion. We saw selling of Long-duration Treasuries, most of it trimming into the bounce. TLT notched $1.1 billion in outflows as the largest ETF in the category rallied with +5.3% total return for the month. In Canada, there was also broad-based buying of fixed income ETFs. We saw buying activity in Aggregate bond products like ZAG and VAB. We also saw investors allocating towards Floating Rate products like XFR and ZAAA, alongside Discount Bond funds that aim to have a greater portion of their returns generated through capital appreciation (ZCDB and DXDB were the two ETFs in the category with the largest inflows).

Canadian ETF investors generally had a strong month, and the data reflects it. Total Canadian-listed ETF flows reached $22.6 billion in October, making for yet another robust monthly tally that keeps Canada firmly on pace to shatter its 2025 annual record. The weekly flow pattern was remarkably consistent – there was nearly $5 billion entering Canadian ETFs every week. The 'Buy Canada' trade with a home team bias that defined the month of September did not fade in October. Canada-focused equity ETFs attracted nearly $5 billion and over the course of October, represented roughly 25% of all inflows this month, up from ~20% historically. Dividend funds like XDIV added $165 million, and VDY brought in $65 million, continuing the years-long theme of Canadian investors gravitating toward dividend income.

The Canadian energy story was an interesting one this month; there was a notable divergence between price and flows. XEG gained +10.9% in the month but saw ~$60 million of outflows, indicating investor selling into the strength. The same dynamic played out in Utilities (XUT), which gained +4.9% but shed $460 million, the largest outflow of any Canadian ETF tracked. RBC Capital Markets’ new Canadian strategist, Sara Mahaffey, noted that global equity funds remain structurally underweight Canadian equities, but those underweights have begun to narrow. This could act as a potential additional flow tailwind if Canada continues to outperform several global equity markets and normalization continues.