ETFs for MDFA advisors

Although ETFs are a hot commodity, thousands of financial advisors operating on the MFDA platform are unable to sell them—or else lack the appropriate clearing capability to do so.

The perceived gap has prompted mutual fund providers to begin offering funds that invest directly in a single ETF or basket of ETFs, thereby opening the route for financial advisors to access the popular product structure.

An alternative to traditional index funds, mutual fundswrapping ETFs appear to have carved out a niche by bringing ETFs to the masses of MFDA advisors. At a lower price point than actively managed mutual funds—also paying a trailer and being available in multiple load options—these funds are likely to experience continued growth, although the segment could become increasingly crowded as more players set their sights on this sub-segment.

ETFs IN CANADA

• 1990 World’s first ETF, TIP 35, launches
• September 1999 iShares launches in Canada with XIU
• October 2000 State Street Global Advisors launches ETF (closes November 2002)
• January 2001 TD launches ETFs (closes March 2006)
• March 2006 Claymore launches ETFs
• January 2007 Horizons launches BetaPro Funds
• June 2009 BMO launches ETFs
• May 2011 Canadian ETF Association launched
• May 2011 Invesco Trimark launches mutual-fund wrapping ETFs
• May 2011 XTF launches ETFs
• September 2011 RBC launches ETFs
• November 2011 Vanguard enters Canada
• March 2012 BlackRock acquires Claymore

SERVING ETFs IN A WRAPPER

Assets in mutual funds exclusively wrapping ETFs, in millions of dollars

Source: Investor Economics Insight, February 2012 Indexing report