Canadian IT ETFs Rebound as AI Cycle Reasserts Dominance
Canadian IT ETFs rebound sharply as global tech recovers, with AI-driven growth and sustained inflows reinforcing investor positioning.
Global equity markets have delivered one of the fastest recoveries in recent years, setting the backdrop for a renewed surge in technology exposure. The sharp rebound followed last week’s easing in Iran-related tensions, which triggered a rapid decline in oil prices and a corresponding re-risking across asset classes. US equities led the move, with major indices reaching fresh highs in record time, while volatility compressed across credit and equity markets alike.
As of April 20, some geopolitical uncertainty has resurfaced following renewed tensions in the Strait of Hormuz, weighing modestly on European equities and pushing oil prices higher. However, the broader recovery narrative remains intact. For institutional investors, the key takeaway is that the market’s resilience is increasingly underpinned by structural growth drivers rather than purely macro stabilization—most notably within the technology sector.
Tech market drivers: AI capex and earnings visibility
The reacceleration in technology equities is being driven by the continued expansion of the AI investment cycle. What distinguishes the current phase from prior rallies is the scale and visibility of capital expenditure. Hyperscalers, cloud providers, and enterprise clients are committing to multi-year infrastructure investments spanning compute capacity, data centers, and AI-enabled software ecosystems.
This sustained capex cycle is translating directly into earnings strength. Companies exposed to cloud infrastructure, semiconductors, and AI software are reporting robust revenue growth alongside improving margin profiles, prompting upward revisions to forward estimates. The result has been a broad-based re-rating across the technology complex.
Importantly, the rally has evolved beyond its initial concentration in semiconductor names. Software and services segments are now participating more fully, reflecting a deeper institutional rotation into the broader AI ecosystem. This shift suggests that investors are no longer targeting isolated beneficiaries but are positioning for system-wide adoption of AI technologies across industries.
At the same time, the partial easing of geopolitical risk has supported a rotation out of defensive sectors. Technology, with its combination of liquidity, scalability, and long-duration growth, has attracted a disproportionate share of these reallocations. Nonetheless, elevated valuations are beginning to impose greater selectivity, with capital increasingly directed toward companies offering contractual revenue visibility and clear exposure to AI-driven demand.
ETF performance and flows: Canadian allocation trends
Canadian-listed IT ETFs have mirrored the global rebound, with performance and flows indicating a clear re-engagement from investors. The sector delivered a 7.4% gain week-to-date, outperforming broader domestic equities, while year-to-date returns remain more modest at 2.0%, reflecting earlier underperformance.
Flows, however, tell a more decisive story. Canadian IT ETFs have attracted over CAD 35 million in weekly inflows, bringing year-to-date allocations above CAD 1.0 billion. This divergence between performance and cumulative flows highlights a sustained strategic allocation to technology despite interim volatility.
Exposure remains heavily concentrated in Nasdaq-linked strategies. The iShares NASDAQ 100 Index ETF (CAD-Hedged) (XQQ) continues to dominate the landscape with nearly CAD 4.8 billion in assets, posting a 5.9% weekly gain alongside steady inflows. Similarly, the TD Global Technology Leaders Index ETF (TEC) has attracted over CAD 585 million year-to-date, underscoring strong investor demand for diversified global technology exposure.
Other Nasdaq-100 trackers, including the BMO NASDAQ 100 Equity Index ETF (ZQQ), Invesco NASDAQ 100 Index ETF (QQC), Global X Nasdaq-100 Index Corporate Class ETF (HXQ), Global X NASDAQ-100 Index ETF (QQQX), Hamilton Champions U.S. Technology Index ETF (QMVP), and Evolve NASDAQ Technology Index Fund (QQQT), have delivered consistent performance in the 5–8% range over the past week, though flow patterns remain mixed, suggesting ongoing rebalancing rather than uniform accumulation.
Notably, domestic exposure has exhibited higher volatility. The iShares S&P/TSX Capped Information Technology Index ETF (XIT) surged 13.6% week-to-date, significantly outperforming its global peers, yet remains negative year-to-date. This dispersion reflects the narrower composition of Canada’s domestic tech sector, which is more sensitive to individual stock movements and lacks the breadth of US mega-cap exposure.
