- 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.
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- 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.
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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
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