- Global ETF industry assets up 32 per cent from 2018 to over US$6 trillion
- ESG (Environmental, Social and Governance) investing emerged as one of the largest trends of 2019
- BMO Balanced ESG ETF (ZESG) launched in 2020, blending key themes of ESG and asset allocation investing
TORONTO, Jan. 30, 2020 /CNW/ - BMO Global Asset Management (BMO GAM) today released its annual ETF Outlook Report, which reviews the exchange traded fund (ETF) industry, and highlights trends for the coming year.
A Year in Review: 2019
The global ETF industry continued to expand, driven by strong markets and positive net flows. The industry amassed US$6.2 trillion in assets by the end of 2019(1).
The Canadian ETF market now has more than C$200 billion in assets, with C$28 billion in net flows(2). Inflow highlights in the 2019 market include:
- The Canadian ETF with the most inflows in 2019 was the BMO S&P 500 Index ETF (ZSP, ZSP.U) with C$2.3 billion in new assets(2)
- The Canadian fixed income ETF with most inflows in 2019 was the BMO Aggregate Bond Index ETF (ZAG) with C$1.6 billion net flows(2)
"ETFs are an incredibly effective investment tool in that they become more efficient to trade and hold as they mature," said Mark Raes, Head of Product, BMO GAM. "As new ETFs come to market, providers will continue to push the envelope when developing client solutions."
Today, BMO GAM offers 96 ETF strategies and has a market share of 30.6 per cent in Canada, according to Bloomberg data.
Key Sector Trends
Fixed Income: Changing market conditions and late cycle fears have made fixed income a popular choice among investors pivoting portfolios to a more defensive stance. Fixed income ETFs were the inflow leader in Canada in 2019.
Factor Exposure: Investors recognize how factor exposure can benefit portfolio construction. The most popular exposure by flows in 2019 was low volatility, as investors sought solutions to decrease equity risk amid heightened market movements.
ESG: Investors have a greater understanding of how corporate ESG incidents can impact profitability. There is also a growing body of knowledge of the potential financial benefits of highly rated ESG companies.
Asset Allocation: Awareness of asset allocation ETFs grew in 2019, amassing $3 billion in assets in Canada since their launch in 2018. These funds are the ETF industry's solution to balanced funds.
Liquid Alts: Liquid alternative public funds, including ETFs, have emerged as a result of regulatory changes in Canada. It will take investors time to fully understand these products and how they react to the market.
"The growth opportunity for ETFs remains significant as the efficiency, low cost and tradability of ETFs resonates with investors," said Mr. Raes. "We expect the industry to maintain its growth trajectory in 2020, backed by greater adoption among existing users."
(1)ETFGI, January 2020
(2)National Bank, January 2020
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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.
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Forward Looking Statements
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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 $852 billion as of October 31, 2019, 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