War and Oil Shock Reshape Canadian ETF Flows
Oil shocks and geopolitical risk pushed Canadian investors toward energy and defense ETFs while strategic metals pulled back.
Canadian ETFs Rotate Into Energy and Defense as Iran War Shakes Markets
Canadian ETF investors repositioned portfolios during the first full week of the conflict involving Iran, as rising oil prices and geopolitical uncertainty triggered sharp sector rotations.
The disruption of tanker traffic through the Strait of Hormuz pushed crude prices above $100 per barrel, the highest level since 2022. With a key energy transit route constrained and several Middle Eastern producers curbing output, markets quickly began pricing in the risk of tighter global supply and renewed inflation pressures.
Canadian-listed ETFs reflected these developments. Energy, defense and cybersecurity exposures attracted investor attention, while metals-linked funds weakened as rising bond yields and a stronger U.S. dollar weighed on commodity prices.
The pattern illustrates how Canadian investors are using ETFs to adjust portfolios rapidly in response to geopolitical shocks.
Energy ETFs benefit from oil-driven momentum
Energy funds remained one of the clearest beneficiaries of the market shift.
The Canadian energy ETF segment now manages roughly $3.4bn in assets and delivered gains of just over 2% during the week, extending its year-to-date return to more than 23%. Net inflows reached nearly $19m during the week, pushing total inflows this year above $36m.
Performance across the largest products was broadly consistent. The Global X Equal Weight Canadian Oil & Gas Index ETF (NRGY) advanced about 1.6% during the week and remains up over 20% in 2026, although the fund experienced modest outflows as investors rotated between energy strategies.
The BMO Equal Weight Oil & Gas Index ETF (ZEO) recorded a similar weekly gain but attracted more than $7m in inflows, highlighting continued demand for diversified exposure to Canadian oil and gas producers.
Commodity-linked ETFs also captured the oil rally more directly. The Global X Crude Oil ETF (HUC) climbed roughly 8.6% during the week, pushing its year-to-date gain above 21% as investors sought exposure to rising crude prices.
Natural gas markets also strengthened amid fears of prolonged supply disruptions. The Global X Natural Gas ETF (HUN) advanced more than 12% during the week, reflecting increased volatility across global energy markets.
Defense and cybersecurity funds attract strategic allocations
Defense-related ETFs also saw notable investor demand as geopolitical tensions intensified.
The Global X Defence Tech Index ETF (SHLD), Canada’s primary defense-themed ETF, rose about 2.8% during the week and has gained more than 18% so far this year. The fund gathered nearly $15m in inflows during the week and has attracted over $87m in 2026, underscoring growing investor interest in defense technologies.
Cybersecurity ETFs also moved higher as concerns about digital conflict increased. Analysts have warned that groups aligned with Iran may attempt cyberattacks targeting infrastructure and government networks.
The Evolve Cyber Security Index ETF (CYBR) climbed roughly 4.8% during the week. However, flows were slightly negative, suggesting that investors remain cautious after earlier volatility in technology-focused sectors.
Metals ETFs retreat as dollar strength pressures prices
Metals-linked ETFs moved in the opposite direction.
Funds tied to strategic metals — including gold, silver, and copper — declined sharply during the week as a stronger U.S. dollar and rising bond yields reduced the appeal of commodities.
The move was visible in the iShares S&P/TSX Global Base Metals Index ETF (XBM), one of Canada’s largest metals-focused ETFs. The fund fell nearly 13% during the week, although it remains up more than 11% year-to-date and has attracted over $128m in inflows in 2026.
The pullback reflects growing concern that higher energy prices could slow global economic growth, potentially weakening industrial demand for metals such as copper.
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This article was written on March 3rd, 2026. Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.
