04 Oct 2017

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Kimberly Yip Woon Sun

Canadian ETFs: The latest launches and new market players

04 Oct 2017

Not a day goes by without hearing about exchange-traded funds, whether it be ETF launches or new market players joining the industry. September was one of the busiest months of 2017 so far, with 26 new ETFs and assets under management peaking at $135-billion. The market is increasingly saturated with 27 ETF providers, compared to only 17 for the same period last year. This month alone, three issuers entered the industry – PIMCO Canada, Evolve funds and Galileo Global Equity Advisors Inc.

PIMCO Canada issued ETF series of the PIMCO Monthly Income Fund (Canada) and the PIMCO Investment Grade Credit Fund (Canada). “We want to provide our Canadian investors with additional, convenient access points to two of our most popular bond strategies” said Stuart Graham, Managing Director and Head of PIMCO Canada. Pacific Investment Management Company LLC (PIMCO) is one of the world’s premier fixed income investment managers.

Evolve Funds differentiates itself by focusing on niche markets. Its goal is to bring innovative solutions to Canadian investors. Three of its four ETFs are thematic funds, covering gender diversity, future cars and cyber security. The fund manager recently filed to introduce a bitcoin ETF. U.S. regulators have rejected cryptocurrency ETFs until now. Will Canadian regulators approve the virtual currency ETF?

Galileo Global Equity Advisors Inc., advised by U.S. Global Investors Inc., launched the U.S. Global Go Gold ETF, a smart factor, passively managed fund that is designed to track the U.S. Global Go Gold and Precious Metal Miners Index. The index is designed to capture the performance of companies engaged in the production of precious metals and minerals.

Sun Life Global Investment will acquire Excel Funds and will overlook Excel’s ETF business. Excel Funds joined the industry in May with two global multi-asset ETFs. The funds have not appealed to many investors yet. Sun Life may have a better chance than Excel Funds in attracting assets with their well-established distribution channels.

Competition is also intensifying in the exchange market, which was a monopoly dominated by the TSX for a long time. 25 ETFs are currently listed on Aequitas NEO Exchange, compared to only one in 2016. The underdog has lured six ETF sponsors. Earlier this year, BlackRock switched the listing venue of 5 ETFs from TSX to NEO. BMO launched three U.S. Treasury bond ETFs on the exchange shortly after and just now, RBC introduced its first suite of broad base index ETFs on NEO.

The competitive landscape is driving fees lower. Asset managers race to offer more affordable investment solutions. For instance, Horizons is extending the 4 basis point (bps) rebate on the Horizons S&P/TSX 60 Index ETF (HXT). As such, the effective annual management fee on HXT continues at 3 bps, making it the world’s lowest-cost Canadian Equity ETF. Dynamic Funds and BlackRock Canada’s iShares reduced the management fee of the following ETFs:

Source: BlackRock Canada

Below is a list of ETF listings launched in September:

Source: Inovestor Inc.

 

 

Canadian ETFs: The latest launches and newest play...

Not a day goes by without hearing about exchange-traded funds, whether it be ETF launches or new market players joining the indust...

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Not a day goes by without hearing about exchange-traded funds, whether it be ETF launches or new market players joining the indust...

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