Now a doyen for ETF issuers and other large providers, Gopaul sees a new phase of growth for Canada’s ETF space
Several months after the conclusion of his lengthy career at one of Canada’s three largest ETF firms, Kevin Gopaul is embarking on a new professional chapter – and he couldn’t be more excited.
“It feels extremely energizing and empowering,” Gopaul (pictured above) told Wealth Professional. “I'm proud of what we accomplished at BMO, but the ETF ecosystem is evolving and expanding rapidly. And I hope to help the expansion itself.”
It was last August that BMO Global Asset Management (BMO GAM) announced Gopaul’s departure from his role as president and chief commercial officer of BMO ETFs and BMO GAM to “pursue other opportunities.” That void has been filled by Sara Petrcich, who now serves as head of BMO GAM’s ETF & Structured Solutions team.
Gopaul hasn’t let any moss grow under his feet since then. Leveraging the unique ETF expertise he amassed over the course his 25-year career – which encompasses product development, portfolio management, and crafting distribution and business strategies across the globe – he’s started a consulting company called ETF Solutions, Inc., which was recently tapped as a partner by Accelerate Financial Technologies, an Alberta-based alternative investments firm.
“I’m receiving a lot of inquiries and having good discussions with companies of all sizes,” he says. “It’s been so busy with domestic and global firms … They need help to decide what their next phase of growth looks like.”
Some smaller players and upstarts, Gopaul says, are seeking his advice to design competitive and differentiated ETF products. Many larger firms, meanwhile, seek counsel on how to get to the next level as they move up from retail to institutional engagements. He’s also had some stock exchanges and index providers knock on his door as they seek to maximize their value-add to ETF manufacturers.
“Some US firms want to come into Canada and ask ‘How do we avoid the pitfalls … Can you help us shorten the cycle in coming here?’” he says. “I’ve had experience launching ETFs in London and Asia, so I’ve also had global firms asking me which regulators and distribution partners they should be talking to in those markets.”
While some may wonder whether the Canadian ETF industry still has room to run, Gopaul argues it’s still in rapid growth mode. Recalling his view from the top at BMO GAM, he says there’s a continuing expansion in the breadth and number of users across all distribution channels.
“Every quarter and every year, I’ve seen more and more people considering ETFs,” he says, particularly in the increasingly important direct investment channel.
Another related trend, which Gopaul says hasn’t played out in Canada as much as in the US and other parts of the world, is the cannibalization of mutual funds in favour of ETFs. With new money continuing to flow into ETFs, he argues the mutual fund-to-ETF shift – not to be confused with a shift from active to passive, he emphasizes – is inevitable.
“We’ve seen people selling single securities, like single stocks and bonds, to buy an ETF. But we haven’t seen as much cannibalization from mutual funds,” he says. “I think we’ll see buyers of actively managed strategies who increasingly prefer ETFs.”
“There’s roughly $400 billion in ETF assets in Canada, and I see a fairly straight path up to $750 billion … nearly doubling in the next three years,” Gopaul says.
As ETFs continue to gain assets and capture market share, he anticipates small independent ETF issuers will have an opportunity to gain prominence as they meet investors’ needs more nimbly. He also expects white labelling – a practice that’s been taking hold in the US and Europe – to become more of a factor in Canada as ETF issuers strive for more efficiency in their businesses.
“I think we’ll also be seeing growth in alternative asset class exposures in investor portfolios, such as liquid alternatives and commodities,” Gopaul says. “I also believe we’ll see a renewed interest in leveraged and inverse products as well. … I’m seeing continued growth in the US, and I think that trend will come here as investor education continues to improve.”
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