Canada’s 30-year-old ETF industry will keep growing, finds study

New figures show continued interest from Canadian ETF investors and more opportunities for advisors

Canada’s 30-year-old ETF industry will keep growing, finds study

The Canadian ETF space will continue to amass assets as investors plan to raise their holdings and financial advisors capitalize on opportunities to provide more information about the products.

Those were among the main findings in a new study conducted by Pollara Strategic Insights for Mackenzie Investments, which was released just ahead of the 30th anniversary of Canada’s first ETF.

“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,” a statement from Mackenzie read.

Citing the Canadian ETF Association, the firm said Canada currently hosts more than 760 ETFs with $211 billion in assets under management as of January 31, 2020.

And those assets are going to steadily increase, if the survey findings are any indication. Among respondent retail investors whose portfolios currently include ETFs, 86% said they’ll be increasing their holdings in the next two years, while 52% of those not investing in ETFs said they plan to start.

Low fees and diversification opportunities were tied as the top benefit of ETFs, as each was identified by 62% of ETF investors as the most beneficial attribute; “strong liquidity potential” was a close runner-up, with 59% of respondents saying it’s the most useful feature.

The survey also suggested substantial opportunities for Canadian financial advisors and asset managers to provide more education on ETFs, as 76% of respondents said retail investors would gain from more information and resources on such products.

“The more retail investors know about ETFs, the more likely they are to invest in them,” said Michael Cooke, SVP & Head of ETFs, Mackenzie Investments. “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.”

Other results suggested the existence of a home bias among retail investors. Sixty-one per cent of respondents said they prefer to buy their ETFs from a Canada-based provider based on beliefs that local firms address Canadian investor needs better and that the Canadian financial system is stable.

“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,” said Mackenzie Investments President and CEO Barry McInerney.


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