Actively managed ETFs represent 11 per cent of the $86.6 billion in total ETF assets in Canada. It’s the highest percentage of any developed market in the world. Year-over-year as of May 31, actively managed ETF assets under management totaled $9.2-billion, almost 50 per cent higher than a year earlier.
Investors and advisors are eating them up and nowhere is that more prevalent than with fee-based advisors who charge a percentage of total AUM. While the dollars plowed into actively managed ETFs is impressive, it’s their performance that should be getting the attention of advisors.
Data compiled by Bloomberg points to actively managed ETFs in Canada climbing 4.1 per cent on average in the 12 months through June 29. More impressive than that is the 6.9 per cent gain by active-equity ETFs, more than four percentage points higher than its passive-equity peers.
Mutual fund companies show no outward worries about actively managed ETFs.
“I don’t think we’re feeling any particular threat from ETFs,” said Ian Bragg, IFIC’s senior manager of research and statistics. “We see mutual funds and ETFs as different products serving different needs and they can work together.”
That might change once the MFDA gets dealers set up to handle the purchase and sale of ETFs. At that point it’s only a matter of time before actively managed ETFs from Horizons and others take market share from mutual funds companies.
“For investors who want to remain in active funds, Horizons will start to look a lot more attractive,” said John Gabriel, an analyst at Morningstar in Chicago. “With their ETFs, they’re looking to take a chunk of the mutual-fund pie. People may see their products and start to migrate.”