News Releases

TORONTO, ONTARIO--(Marketwire - Jan. 17, 2012) - According to the Canadian ETF Outlook 2012 report issued today by BMO Asset Management, the Canadian ETF industry is set for dramatic growth and change in the coming year, following the growth of market assets of 13 per cent in 2011 despite continued market volatility. This year's growth will, in part, be caused by the emergence of new providers, the introduction of more ETFs, increased price competition and more sophisticated product offerings.

ETFs are securities that generally track indexes but are traded like stocks. There are currently fewer than 250 ETFs in Canada (compared to 4,500 mutual funds). Since its inception in June 2009, BMO Asset Management's ETF product portfolio has grown to 44 funds.

BMO ETF innovations include:

• Low Volatility ETF
• Covered Call ETFs
• Target maturity ETFs

"While still in its infancy, Canada's ETF industry has shown impressive growth, with a compounded annual asset growth rate of 18.5 per cent over the last five years, and 28.6 per cent over the last ten," said Rajiv Silgardo, Co-CEO, BMO Global Asset Management.

"In 2012, we expect the industry will continue to grow, although competition will be stiffer and market conditions more volatile," noted Mr. Silgardo.

According to Canadian ETF Outlook 2012, the industry will see:

• The introduction of more ETFs, particularly from the newer participants.
• Increased price competition.
• More hybrid structures, such as mutual funds that invest explicitly in ETFs to provide long-term strategic investment exposures.
• The emergence of more active and strategy-based ETFs, with some large and well-known firms looking to enter the space.
• Changes of ownership in the industry, which may lead to some consolidation and possibly the closing of some of today's existing ETFs.
• Increased regulatory focus, particularly in Europe, over synthetic ETFs that use asset-based swaps to create the desired investment exposures.

The report also notes that ETFs continue to gain popularity in Canada because of their cost effectiveness (including low management fees), real-time transparency into underlying portfolios and investments, liquidity whenever markets are open and the efficient addition of many more investment opportunities and solutions compared to other products.

"All of these benefits have allowed investors - from individual investors with RRSPs to institutional investors - to build more sophisticated portfolios with a far better balance between the 'hoped for' returns versus the almost guaranteed risks and costs that accompany investments in almost any form," stated Mr. Silgardo.

The report also identified other lesser-known benefits of ETFs, including:

• Market de-segmentation: all investors, large and small, can and generally do use the same kinds of ETFs to include in everything from pension funds to Retirement Registered Savings Plans (RRSPs) to endowment funds to Tax Free Savings Accounts (TFSAs).

• Portfolio diversification: while mutual funds are a great way of accessing active risk and returns, ETFs on the other hand provide quick, easy and cost-effective access to market risk and returns. Investors are becoming more knowledgeable and are increasingly combining the two types of products to provide the optimal trade-off among returns, risk and cost.

To view the full report or for more information on ETFs, please visit: www.etfs.bmo.com.

BMO ETFs are administered and managed by BMO Asset Management Inc., an investment fund manager and portfolio manager and a separate legal entity from Bank of Montreal.