2013 to be banner year for ETFs

The growth of the Canadian exchange traded fund (ETF) industry over the next year will be driven by, among other factors, increased awareness among investors of the fundamental benefits of ETFs and their more strategic long-term use within portfolios, finds the annual BMO Canadian ETF Outlook Report. The study shows ETFs enjoyed tremendous growth in […]

By Staff | February 7, 2013 | Last updated on February 7, 2013

2 min read

The study shows ETFs enjoyed tremendous growth in 2012. At year end, the Canadian ETF industry had approximately $56.4 billion in assets under management, up 33% from 2011. Canada had its largest ever annual inflows in 2012, at $12 billion.

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“The rapid growth of the ETF industry in 2012 is likely to continue this year,” says Kevin Gopaul, senior vice president and chief investment officer, BMO Asset Management Inc. “We can look to the American ETF industry as a predictor of what we can expect in Canada this year.”

This will create new user groups and encourage innovative ideas for using ETFs in portfolios leading to increased awareness and adoption rates, he adds.

The report indicates that growth will come as a result of stronger competition, convergence of the mutual fund and ETF industries, and using ETFs as more long-term strategic portfolio holdings.

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It predicts the following trends for the industry in 2013:

Stronger competition and possible new entrants as market share evens out across industry players.
Investors will seek out defensive growth strategies with a potential for leaning towards equities.
Increased merging of mutual funds and ETFs in portfolios.
Price competition will remain a priority across providers.
Investors will look to enhance yield through income-generating investments.