TORONTO, June 24, 2019 /CNW/ - BMO Global Asset Management
(BMO GAM) has released a special edition ETF Report to mark
10 years since launching Exchange Traded Funds (ETFs) in 2009. The
report highlights the top 10 trends in the Canadian ETF industry
over the past decade, as well as what will shape it moving
forward.
"The industry has seen tremendous progress over the last decade,
prompting innovative investment products and tools," said
Kristi Mitchem, Chief Executive
Officer, BMO Global Asset Management. "As the popularity of ETFs
accelerates in Canada and across
global markets, there is a greater need for education and support
to maximize portfolio efficiency."
"As a proud leader in the Canadian ETF industry, we have been
growing and evolving our business in order to stay ahead of the
curve and ensure we're meeting the needs of advisors and
investors," said Kevin Gopaul,
Global Head of ETFs, BMO Global Asset Management. "Ten years later,
with a third of the market share, we remain well-positioned
offering a comprehensive product suite that includes core equity
ETFs and a broad range of fixed income ETFs, as well as
solution-based ETFs."
Top 10 Trends
- Blending active and passive: Moving beyond the
conventional wisdom of one or the other, the combination of
active and passive investing allows for a more effective portfolio.
For example, using passive investing in developed markets and
active investments in less efficient markets where active
management can make a difference.
- Resetting the core: Core ETFs continue to represent
the backbone of the industry, as a vehicle delivering diversified
broad market returns, especially in the event of a strong market
rally as they typically include all the holdings in a market. BMO
S&P 500 Index ETF (ZSP) is the largest U.S. equity exposure
listed in Canada, with a market
leading index.
- Changes in distribution: The popularity of ETFs
across different investor types creates demand for various
distribution models rendering ETFs more accessible. An innovative
development in the industry, robo-advisors serve as an effective
low-cost ETF investment platform. Currently the robo-advisor
industry holds more than C$7 billion
in assets and has an anticipated annual growth rate of 35 per cent.
Additionally, the last ten years has seen a shift in advisor
activity towards fee-based investing accounting for 73 per cent of
assets under management (AUM).
- Adding new exposure: The industry recognized the
importance of growth in over-the-counter (OTC) exposures early on,
seeing it as an opportunity to invest across a range of asset
classes and to help investors build and adjust portfolios with
efficient, low-cost ETFs. In the last ten years, investors have
relied more on ETFs in building fixed income portfolios, instead of
focusing solely on equity markets. As one of the top ten
fixed income ETF providers globally, BMO offers the largest fixed
income ETF in Canada, BMO
Aggregate Bond Index ETF (ZAG).
- Fees and CRM2: The implementation of CRM2
represented one of the biggest regulatory initiatives over the last
decade. A significant step forward in client communications
promoting transparency about costs and performance between advisors
and clients. ETFs support this regulatory agenda, allowing advisors
to establish individualized fee agreements with clients.
- ETF solutions: To make ETFs accessible to all
investors, the industry has evolved towards ETF based funds,
offering advisors untapped areas in which to invest while
delivering lower cost solutions. Because of their effectiveness,
active managers choose to include ETFs when creating
portfolios.
- Portfolio guidance: The growing popularity of ETFs
has led to the development of public access tools, positioning
users to build robust portfolios based on different investment
strategies.
- Active ETFs: The launch of active ETFs has generated a
lot of investor interest, since they offer many of the same
benefits as their passive counterparts, but with the added benefit
of a manager that can adapt to changing market conditions. In
response, the industry has seen a rise in actively managed ETFs,
including active fixed income exposures like BMO Global Strategic
Bond Fund (ZGSB).
- Education: As the ETF industry continues to mature,
educational resources help to dispel myths and address
misconceptions surrounding ETFs. Encouraging a better understanding
of ETFs as an effective, transparent, low-cost vehicle in which to
invest, remains an important goal for many providers, including BMO
GAM.
- Asset allocation ETFs: More recently, balanced ETFs have
re-emerged, offering a simple and convenient one-product approach
to achieving a balanced portfolio. With more than 800 ETFs in
Canada from 35 providers,
investors must sort through increasing amounts of research, leading
to a demand for simple basket ETFs.
To view the full report, please click here. For more information
on BMO ETFs, visit: www.bmo.com/etfs.
S&P 500® is registered trademark of Standard & Poor's
Financial Services LLC ("S&P"). This trademark has been
licensed for use by S&P Dow Jones Indices LLC and sublicensed
to BMO Asset Management Inc. in connection with BMO S&P 500
Index ETF (ZSP). ZSP is not sponsored, endorsed, sold or promoted
by S&P Dow Jones LLC, S&P, TSX, or their respective
affiliates and S&P Dow Jones Indices LLC, S&P, TSX and
their affiliates make no representation regarding the advisability
of trading or investing in such ETF.
BMO Global Asset Management is a brand name that comprises BMO
Asset Management Inc., BMO Investments Inc., BMO Asset Management
Corp., BMO Asset Management Limited and BMO's specialized
investment management firms.
Commissions, management fees and expenses (if any) all may be
associated with investments in exchange traded funds. Please read
the ETF Facts or prospectus before investing. Exchange traded funds
are not guaranteed, their values change frequently and past
performance may not be repeated.
For a summary of the risks of an investment in the BMO ETFs,
please see the specific risks set out in the prospectus. BMO
ETFs and ETF series trade like stocks, fluctuate in market value
and may trade at a discount to their net asset value, which may
increase the risk of loss. Distributions are not guaranteed and are
subject to change and/or elimination.
BMO ETFs are managed by BMO Asset Management Inc., which is an
investment fund manager and a portfolio manager, and a separate
legal entity from Bank of Montreal.
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About BMO Financial Group
Serving customers for
200 years and counting, BMO is a highly diversified financial
services provider - the 8th largest bank, by assets, in North
America. With total assets of $830 billion as
of April 30, 2019, and a team of diverse and highly engaged
employees, BMO provides a broad range of personal and commercial
banking, wealth management and investment banking products and
services to more than 12 million customers and conducts business
through three operating groups: Personal and Commercial Banking,
BMO Wealth Management and BMO Capital Markets.
SOURCE BMO Financial Group