To mark the 30th anniversary of the first Exchange Traded Fund (ETF) listing in Canada, Mackenzie Investments has released the results of a study that shows a majority of Canadian investors (56 per cent) plan to either expand their ETF holdings or include them for the first time within their investment portfolios in the next two years. Further, the study also found that most Canadian investors (61 per cent) prefer to purchase ETFs from Canadian providers.
The first-ever ETF (known as ‘Toronto Index Participation Fund’) initially tracked the TSE 35 index and started trading on the Toronto Stock Exchange on March 9th, 1990. According to the Canadian ETF Association (CETFA) there are currently more than 760 ETFs listed in Canada, which account for CDN $211 billion in assets under management (AUM) as of 31 January, 2020.
The study, which was conducted by Pollara Strategic Insights, revealed that this number will steadily increase given that:
• 86 per cent of retail investors who currently have ETFs in their portfolios stated they will be increasing their holdings in the next two years; and
• 52 per cent who do not yet own any ETFs reported they plan to start investing in them.
When asked what they thought were the biggest benefits of ETFs, 62 per cent identified low fees, 62 per cent diversification opportunities, and 59 per cent strong liquidity potential.
The study also found that there exist significant opportunities for Canada’s asset managers and financial advisors to further educate investors about the potential of ETFs, with 76 per cent of respondents feeling that retail investors would benefit from more information and resources on this investment fund category.
“Canadians should take great pride in the fact that our country played a pioneering role in the development of ETFs,” says Michael Cooke, SVP & Head of ETFs, Mackenzie Investments. “The more retail investors know about ETFs, the more likely they are to invest in them. Thirty years is not a long time for an investment fund category to be around so there’s a huge opportunity for advisors to educate and inform their clients about ETFs and to consider integrating them into portfolios to enhance returns.”
Interestingly, the study found that 61 per cent of retail investors would prefer to buy their ETFs from a Canadian-based provider, believing local firms are more focused on Canadian investor needs and also citing the stability of the Canadian financial system.
“There are advantages to buying Canadian domiciled ETFs, including potential tax efficiencies and the ability of the provider to anticipate and respond to the often-unique needs of local investors,” says Barry McInerney, President & CEO, Mackenzie Investments.
McInerney notes that Mackenzie leverages its global presence and expertise to develop and engineer ETFs that are domiciled in Canada and that are specifically designed for the Canadian investor. Mackenzie’s comprehensive suite of 30 ETFs span active, strategic beta and index solutions and has grown to more than CAD5.7 billion in AUM in less than four years.
“Our ETFs are made for Canadians, by Canadians. Mackenzie’s success in becoming one of the country’s leading ETF providers in such a short period of time can be attributed to our strategic approach that considers macro outlooks, total cost of ownership, product differentiation and design.”