Bringing you live news and features since 2006 

Canada’s ETF industry to continue momentum into 2015, says BMO GAM

RELATED TOPICS​

The Canadian exchange-traded fund (ETF) industry sits at CAD70.1 billion in assets under management (AUM) at the end of H1 2014, up 11.1 per cent from year end 2013, according to BMO Global Asset Management (GAM).

BMO GAM’s Canadian ETF Outlook Update 2014 reveals that, so far this year, equity ETFs have had CAD529 million in inflows and fixed income ETFs saw impressive inflows of more than CAD2.5 billion.
 
BMO GAM’s ETF business recently surpassed CAD15 billion in AUM and currently consists of 58 funds.
 
“Capital markets are continuing to perform well and this has been reflected in the continued growth of the ETF industry in Canada,” says Rajiv Silgardo, co-CEO, BMO Global Asset Management. “Investors look to ETFs as portfolio construction tools used to access growth across sectors and geographies.”
 
The report identified three key factors which have played a significant role in the ETF industry so far this year:
 
1.Competition and growth: Continued growth results in more products being offered, and more competition. However, new strategies increase different forms of access to various asset classes. Additionally, the reduction of ETF management fees across major investment categories presents an opportunity for Canadians to invest very effectively in core broad market mandates.
 
2.International efficiency: The use of Canadian ETFs for exposure to international markets will continue to gain popularity because of low fees and tax efficiencies compared to international products.
 
3.Smart beta: Smart beta products which leverage alternative-weighting strategies, offer exposure based on various factors such as low volatility, momentum and quality. These products, targeting specific factors that provide specific investment outcomes over the long term, will continue to be successful.
 
Silgardo says providers have been focused on low volatility funds, which take advantage of rising markets while offering downside protection. Dividend-based products also offer some downside protection, while delivering higher and more tax efficient income from mature, stable companies.
 
According to the report, the substantial growth of ETF-based portfolios will continue, as these funds combine the efficiency, diversification and tradability of ETFs with professional active management.
 
As investors seek out income in the current low interest rate environment, option-based strategies that add income will expand globally and across sectors. Additionally, specialty solution ETFs will be in the spotlight as providers innovate to create products that will cater to specific investor needs.
 
ETFs have captured the attention of the market generally, but have been particularly significant for fixed income. Investors are reacting to market changes – specifically the ongoing American economic recovery – and are looking to position their bond portfolios in response to them. This could expand beyond Canadian bonds to US and global fixed income ETFs.
 
“We expect the momentum into ETFs to continue at a rapid pace, as more investors use more ETFs to build better portfolios. This will result in more competition, innovation and benefits to users,” says Silgardo.

Latest News

ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..
Adapting product lines to fit into changing methodologies and meet shifting demand is essential to remaining relevant in the industry..
Investors urgently need greater access to diversified investment strategies aligned with the Paris Agreement on climate change if the world..

Related Articles

Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Ed Rosenberg, Texas Capital
Texas Capital Bank first opened its doors back in December 1998 and nowadays offers wealth-management services, as well as commercial,...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by