13 Aug 2018

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Kimberly Yip Woon Sun

The ETF Fee War Continues

13 Aug 2018

Exchange-traded funds continue to gain ground. At the end of the second quarter, ETF’s market share of investment fund assets approximated 9.4%, an increase of 0.9% from the previous 12 months, according to a report from the Canadian ETF Association. The success of the ETF industry attracts yet another mutual fund provider, Fidelity Investments Canada ULC. The mutual fund giant will enter the ETF market with six dividend ETFs, covering the Canadian, U.S. and international market.

JULY ETF LAUNCHES:

Source: Inovestor Inc.

In July, Horizons ETFs introduced two multi-asset ETFs that provide one-ticket solutions to investors, the Horizons Conservative TRI ETF Portfolio (“HCON”) and the Horizons Balanced TRI ETF Portfolio (“HBAL”). The ETF portfolios invest in Horizons’ total return index (TRI) ETFs. TRI ETFs use total return swap to replicate synthetically the returns of their underlying index instead of holding securities in the same proportion as the replicating index. HCON and HBAL are Canada’s first 0% direct management fee ETFs but investors are charged management fees indirectly on the underlying ETFs. The estimated management expense ratio (MER) of HCON and HBAL will be approximately 0.15% and 0.16% and will not exceed 0.17% and 0.18%, respectively.

The emphasis on lower fees continues to prevail. Over the past few years, the market has been going through an ETF fee war. Management fees keep on going down with ETF Providers issuing cheaper options, such as the newly introduced 0% management fee ETFs, and lowering management fees on their existing product line-ups.

Invesco Canada is the most recent ETF provider to reduce the management fee on some of its ETFs. The amended funds are summarized in the table below, along with their new fees. Invesco also imposed a 0.10% fee waiver on two ETFs, the Invesco S&P Emerging Markets Low Volatility Index ETF (“ELV”) and the Invesco FTSE RAFI Global + Index ETF (“PXG”).

Source: Inovestor Inc.

Portfolio Manager Commentary – July 2018

Exchange-traded funds continue to gain ground. At the end of the second quarter, ETF’s market share of investment fund assets ap...

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Canadian ETFs: July’s launches and terminati...

Exchange-traded funds continue to gain ground. At the end of the second quarter, ETF’s market share of investment fund assets ap...

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