News Releases
- 2018 brought the advent of the asset allocation ETF, an industry disruptor
- ETFs continue to prove their value through times of global market volatility
- BMO GAM offers 77 mandates and has a market share of 31 per cent in Canada
TORONTO, Jan. 31, 2019 /CNW/ - BMO Global Asset Management (BMO GAM) today released its annual ETF Outlook Report, which examines the Exchange Traded Fund (ETF) industry and highlights the trends expected to drive the year ahead.
According to the report, the global ETF industry is projected to double to more than US$10 trillion over the next five years. The Canadian industry is expected to grow at a faster rate to C$400 billion by 2024.
Looking Back at 2018
The global ETF market hit a record high of US$4.7 trillion assets under management (AUM) at the end of the year. There were 6,483 ETFs globally, up almost 12 per cent from the previous year.
- The Canadian ETF market grew to C$156 billion AUM with inflows of C$20 billion.
- The Canadian equity ETF with the most inflows last year was BMO S&P/TSX Capped Composite Index ETF (ticker: ZCN), with more than C$1 billion in net flows.
- Investors continued to show support to broad Canadian equity exposure – especially to financials and energy – seeing value as Canada has underperformed leading global markets.
"Investors look to ETFs as an effective, transparent, low cost asset allocation tool," said Kevin Gopaul, Global Head of ETFs, BMO GAM. "The diversification and trading efficiency that ETFs offer has become more important than ever as volatility has returned to global markets. The value of positioning with traditional passive ETFs and new active ETFs was evident during the market corrections in the fourth quarter."
Today, BMO GAM offers 77 mandates and has a market share of 31 per cent in Canada, according to Bloomberg data.
Key Trends from 2018 into 2019
The report also looks at themes affecting the ETF industry.
Asset Allocation Investing: 2018 saw the introduction of asset allocation ETFs, the industry's answer to portfolios traditionally offered by mutual funds. Similar to the success of traditional ETFs, these ETFs are showing signs of disrupting the industry by challenging fund construction and entrenched products.
Volatility: Global monetary tightening, rocky geopolitics, and lower earnings from leading stocks led to increased market volatility. As a result of their trading efficiency, where a diversified exposure can be placed with one intra-day trade, investors have turned to ETFs to navigate the resurgence in volatility.
Active ETFs: Strategies that truly differentiate from the market have grown in popularity as market volatility has increased. Just like mutual funds, active ETFs will need to prove their value by delivering outperformance and differentiating exposures.
Passive ETFs: Traditional ETFs with their diversification, low cost, trading efficiency and transparency – are as relevant as ever – and the addition of active ETFs is complementary.
Fixed Income: There has been a trend toward short-dated fixed income ETFs. Tactical trading and repositioning within fixed income using ETFs has become a popular strategy.
While ETFs are now a mainstream option, they still only represent 10 per cent of the AUM of the mutual fund industry in Canada. As the number of ETF providers and the sheer number of ETFs offered increases, the report notes that it is more important than ever to work with an established provider that is focused on education and support.
"The increased availability of industry tools and databases, along with the rise in the number of ETF analysts, have helped investors research and improve their portfolios," said Mr. Gopaul. "As investors look to ETFs, there is a greater need for clarity between choices."
To view the full report, please click here. For more information on BMO ETFs, visit: www.bmo.com/etfs.
®/™Registered trade-marks/trade-mark of Bank of Montreal, used under licence.
BMO Global Asset Management is a brand name that comprises BMO Asset Management Inc., BMO Investments Inc., BMO Asset Management Corp., BMO Asset Management Limited and BMO's specialized investment management firms.
BMO ETFs are managed by BMO Asset Management Inc., which is an investment fund manager and a portfolio manager, and a separate legal entity from Bank of Montreal.
Commissions, management fees and expenses all may be associated with investments in BMO ETFs. Please read the ETF facts or prospectus of the relevant BMO ETF before investing. BMO ETFs are not guaranteed, their values change frequently and past performance may not be repeated.
For a summary of the risks of an investment in the BMO ETFs, please see the specific risks set out in the prospectus. BMO ETFs trade like stocks, fluctuate in market value and may trade at a discount to their net asset value, which may increase the risk of loss. Distributions are not guaranteed and are subject to change and/or elimination.
Forward Looking Statements
Certain statements included in this news release constitute forward-looking statements, including, but not limited to, those identified by the expressions "expect", "intend", "will" and similar expressions to the extent they relate to the Fund, the Manager and/or the Advisor. The forward-looking statements are not historical facts but reflect the Fund's, the Manager's, and/or the Advisor's current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Although the Fund, the Manager, and/or the Advisor believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. The Fund, the Manager and/or the Advisor undertakes no obligation to update publicly or otherwise revise any forward-looking statement or information whether as a result of new information, future events or other such factors which affect this information, except as required by law.
About BMO Exchange Traded Funds (ETFs)
Established in May 2009, BMO Financial Group's ETF business is a leading ETF provider in Canada. BMO ETFs provide Canadian investors with broader choices and greater access to an innovative portfolio of investment products.
About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider – the 8th largest bank, by assets, in North America. With total assets of $774 billion as of October 31, 2018, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.
SOURCE BMO Financial Group
