Canadians find ETFs confusing

While many Canadians remain unfamiliar with ETFs, the more they learn about them, the more interested they become, according to one provider of the product.

A study by BMO Investments Inc. found that only 18% of respondents said they are familiar with ETFs. However, after being told the benefits ETFs can offer, 74% said they would consider adding them to their investment portfolios.

“Although ETFs have been around for only 20 years, they’re gaining in popularity and we believe they are poised to take off in Canada,” says Serge Pépin, head of investments with BMO Investments Inc. “Investors value the various benefits that ETFs have to offer, including lower costs, transparency, tax efficiencies, investment flexibility and diversity.”

The survey also revealed the key barriers preventing Canadians from holding ETFs in their portfolios. These include:

• not knowing how to get started and/or lack of knowledge (34%);
• uncertainty on how to integrate ETFs into current investments (23%); and
• not having the time or expertise to pick and choose individual ETFs (21%).

“Being a relatively new investment option, it’s only natural that many investors remain unsure how to effectively integrate ETFs into their investment portfolios,” says Pépin. “Many are attracted to ETFs, but a lack of knowledge may make them hesitate when adding them to their investments.”

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.