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BMO ETF Report predicts strong growth for Canadian ETF market in 2012


According to the Canadian ETF Outlook 2012 report issued by BMO Asset Management, the Canadian ETF industry is set for dramatic growth and change in the coming year, following the growth of market assets of 13 per cent in 2011 despite continued market volatility.

This year’s growth will, in part, be the result of the emergence of new providers, the introduction of more ETFs, increased price competition and more sophisticated product offerings.

ETFs are securities that generally track indexes but are traded like stocks. There are currently fewer than 250 ETFs in Canada (compared to 4,500 mutual funds). Since its inception in June 2009, BMO Asset Management’s ETF product portfolio has grown to 44 funds.

“While still in its infancy, Canada’s ETF industry has shown impressive growth, with a compounded annual asset growth rate of 18.5 per cent over the last five years, and 28.6 per cent over the last ten,” says Rajiv Silgardo, Co-CEO, BMO Global Asset Management. “In 2012, we expect the industry will continue to grow, although competition will be stiffer and market conditions more volatile.”

The report notes that ETFs continue to gain popularity in Canada because of their cost effectiveness (including low management fees), real-time transparency into underlying portfolios and investments, liquidity whenever markets are open and the efficient addition of many more investment opportunities and solutions compared to other products.

“All of these benefits have allowed investors – from individual investors with RRSPs to institutional investors – to build more sophisticated portfolios with a far better balance between the ‘hoped for’ returns versus the almost guaranteed risks and costs that accompany investments in almost any form,” says Silgardo.

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