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Canada’s ETF Industry on Pace for Growth


2012 was the most successful year for the exchange traded fund business in Canada. ETFs will continue to gain market share as the industry is gaining relevance.

“The 6%-7% penetration rate of ETFs relative to mutual funds overall and clear management expense ratio advantage are two reasons Mary Anne Wiley, head of BlackRock subsidiary Canada iShares, and her firm continue to see Canada as a huge opportunity,” Yves Rebetez wrote for Finanical Post. [Mirae Planning Entry to ETF Business]

2012 was Canada’s best year yet for ETF industry growth. Assets under management grew 30%, totaling $56.4 billion. Record net inflows of $11.7 billion were experienced, reports Rebetez. [Strong Growth Forecast for Austrialia's ETF Market]

The compounded growth rate of the ETF industry has been at 27% or more over the past decade, however, even if this pace is hard to beat, the uptrend will continue.

Regulatory developments and stricter prospectus disclosures on fees charged have revealed the higher costs of owning mutual funds. Investors have become cost-conscious as fees do eat into principle. This, coupled with supported investment returns, will help continued growth in the industry going forward. [New Canadian ETFs Hedge Against Black Swan Events]

Investor Economics recently noted that the ratio of mutual fund assets to ETF assets was at 15:1 by the end  of 2012, beating the 18:1 seen in 2011. [Fixed Income ETFs a Hit in Canada]

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.