13 Jul 2018

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Kimberly Yip Woon Sun

Competitive Market Drives Down Fees

13 Jul 2018

Competition in the ETF industry is putting pressure on fees. In June, BMO Asset Management Inc. announced that it is reducing the annual management fee on the BMO Aggregate Bond Index ETF (“ZAG”) from 0.09% to 0.08%. ZAG’s new management fee aligns with that of a similar ETF, the Vanguard Canadian Aggregate Bond Index ETF (“VAB”). Vanguard Investments Canada lowered the management fee of its popular fixed income ETF from 0.12% to 0.08% in February. It did not take long for BMO to adjust the fee of ZAG in fear of losing assets.

Another ETF had its management fee reduced. As a result of a change in its replicating index, the management fee of the Horizons Robotics and Automation Index ETF (“RBOT”) was decreased from 0.75% to 0.68%. RBOT is Canada’s first robotics and A.I. ETF. It now seeks to replicate, to the extent possible, the performance of the Indxx Global Robotics & Artificial Intelligence Thematic Index, net of expenses.

JUNE ETF LAUNCHES & TERMINATIONS:

Source: Inovestor Inc.

Source: Inovestor Inc.

First Asset launched the First Asset Health Care Giants Covered Call ETF (“FHI”). It provides differentiated exposure to some of the largest health care companies by aiming to minimize volatility and generate attractive income through an actively managed covered call option writing program. The ETF is equally weighted and holds the largest 20 issuers, measured by market capitalization, as determined by the portfolio manager in its discretion. The call option component of the ETF gives up the upside potential of the constituents to generate regular income. FHI charges a management fee of 0.65% and is offered in CAD hedged and unhedged units.

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