{"id":44442,"date":"2019-01-29T23:16:00","date_gmt":"2019-01-29T23:16:00","guid":{"rendered":"https:\/\/wp2.inovestor.com\/2019\/01\/canadian-etfs-decembers-launches-and-terminations\/"},"modified":"2019-01-29T23:16:00","modified_gmt":"2019-01-29T23:16:00","slug":"canadian-etfs-decembers-launches-and-terminations","status":"publish","type":"post","link":"https:\/\/www.inovestor.com\/en-us\/2019\/01\/canadian-etfs-decembers-launches-and-terminations\/","title":{"rendered":"Canadian ETFs: December\u2019s launches and terminations"},"content":{"rendered":"

In this research report created this week for\u00a0<\/span>The Globe And Mail<\/strong>, we look at\u00a0<\/span>Canadian ETFs: December’s launches and terminations<\/span><\/span><\/strong><\/a><\/p>\n

Despite December\u2019s volatility spike and stock-market gains for the year completely wiped out, the industry\u2019s AUM grew from $147.1-billion at the end of 2017 to $156.8-billion at the end of 2018, according to data from the Canadian ETF Association (CETFA). 2018 has been a hectic year and we saw trends that contributed to the ascending of the Canadian ETF market:<\/p>\n

EXPANDING PRODUCT RANGE<\/h4>\n

More than a hundred ETFs were launched in 2018, including some innovative products like Vanguard\u2019s ETF suite that provides a single-fund portfolio solution to investors according to their risk tolerance. Thematic ETFs were also among the popular products launched last year. They cover themes such as blockchain, artificial intelligence and environmental, social and governance (ESG). These new ETFs make investing more accessible, whether it is through a one-stop fund or through themes that investors believe in.<\/p>\n

LOWER MANAGEMENT FEES<\/h4>\n

The competitive market drove down fees. In 2018, 35 ETFs had their management fee reduced by two to 35 basis points (bps). Horizons even launched zero-per-cent-management-fee ETF portfolio solutions. In Canada, exchange-traded funds remain considerably cheaper than their mutual fund counterparts. Investors slowly turn to these cheaper solutions as they become aware of the impact of fees on their return.<\/p>\n

JUMP IN THE NUMBER OF ETF PROVIDERS<\/h4>\n

Last year, nine ETF issuers joined the market, bringing the total count of providers to 33. The new players include Scotiabank, one of the five largest banks in Canada, and iA Clarington, whose parent company is Canada\u2019s fourth-largest life and health insurance company. Asset managers are joining the ETF bandwagon at a time when asset flows are moving away from traditional mutual funds toward ETFs. Unfortunately, not all of them are able to make the transition. Five sponsors exited the industry, which were mostly through acquisition by bigger players. For instance, WisdomTree Investments acquired Questrade ETFs, Evolve Funds took over Sphere Investments\u2019 ETFs, Redwood Asset Management was amalgamated into Purpose Investments and Sun Life Global Investments acquired Excel Funds before exiting the market altogether.<\/p>\n

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While we expect some of the above trends to persist into the new year, the following catalysts will likely have an impact on the industry in 2019:<\/p>\n

LIQUID ALTERNATIVES<\/h4>\n

Liquid alternatives are available to retail investors as of Jan 3, 2019. Liquid alternatives (or liquid alts) are funds that aim to provide diversification and downside protection through exposure to alternative investments. Up until now, alternative strategies were limited to institutional or high-net-worth individuals due to their complex nature. Several liquid-alts ETFs \u2013 for example, NBI Liquid Alternatives ETF and Desjardins Alt Long\/Short Equity Market Neutral ETF \u2013 are waiting to be approved by regulators.<\/p>\n

A WAVE OF CLOSURES IS ANTICIPATED<\/h4>\n

The Canadian ETF product lineup has increased significantly over the past few years. Some of the new ETFs have been very lucrative, attracting more than $300-million in AUM in less than a year of existence, while others did not attract enough assets to break even. Profit to an issuer is determined as a percentage of assets invested in the ETF. ETFs without enough AUM to cover costs will presumably be terminated.<\/p>\n

SHIFTS IN MARKET SHARE<\/h4>\n

While the industry remains heavily concentrated, the market share of the three largest ETF sponsors plunged from 86.8 per cent to 78.2 per cent over a three-year period in December. In 2019, the arrival of new entrants like National Bank Investments and CIBC will cause even more disruption. We are also anticipating consolidations and exits during the year. BlackRock Canada and RBC Global Asset Management, the first and fifth largest ETF providers, already announced that they are being brought together under one new brand \u2013 RBC iShares.<\/p>\n

Read the full report\u00a0<\/span>here<\/span><\/a><\/span>.<\/span><\/p>\n

This article is written by\u00a0Kimberly Yip Woon Sun, ETF Analyst for Inovestor Inc.\u00a0<\/strong><\/em><\/span><\/p>\n

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In this research report created this week for\u00a0The Globe And Mail, we look at\u00a0Canadian ETFs: December’s launches and terminations Despite December\u2019s volatility spike and stock-market gains for the year completely wiped out, the industry\u2019s AUM grew from $147.1-billion at the end of 2017 to $156.8-billion at the end of 2018, according to data from the […]<\/p>\n","protected":false},"author":14,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[619],"tags":[620,621],"class_list":["post-44442","post","type-post","status-publish","format-standard","hentry","category-intelligence-en-us","tag-etf-en-us","tag-etfs-en-us"],"acf":[],"yoast_head":"\nCanadian ETFs: December\u2019s launches and terminations - Inovestor<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.inovestor.com\/en-us\/2019\/01\/canadian-etfs-decembers-launches-and-terminations\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Canadian ETFs: December\u2019s launches and terminations\" \/>\n<meta property=\"og:description\" content=\"In this research report created this week for\u00a0The Globe And Mail, we look at\u00a0Canadian ETFs: December’s launches and terminations Despite December\u2019s volatility spike and stock-market gains for the year completely wiped out, the industry\u2019s AUM grew from $147.1-billion at the end of 2017 to $156.8-billion at the end of 2018, according to data from the […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.inovestor.com\/en-us\/2019\/01\/canadian-etfs-decembers-launches-and-terminations\/\" \/>\n<meta property=\"og:site_name\" content=\"Inovestor\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Inovestor\/\" \/>\n<meta property=\"article:published_time\" content=\"2019-01-29T23:16:00+00:00\" \/>\n<meta name=\"author\" content=\"Inovestor\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@Inovestor_\" \/>\n<meta name=\"twitter:site\" content=\"@Inovestor_\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Inovestor\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.inovestor.com\/en-us\/2019\/01\/canadian-etfs-decembers-launches-and-terminations\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.inovestor.com\/en-us\/2019\/01\/canadian-etfs-decembers-launches-and-terminations\/\"},\"author\":{\"name\":\"Inovestor\",\"@id\":\"https:\/\/www.inovestor.com\/en-ca\/#\/schema\/person\/6616b197e129a7a95f3107103c871092\"},\"headline\":\"Canadian ETFs: December\u2019s launches and terminations\",\"datePublished\":\"2019-01-29T23:16:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.inovestor.com\/en-us\/2019\/01\/canadian-etfs-decembers-launches-and-terminations\/\"},\"wordCount\":641,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.inovestor.com\/en-ca\/#organization\"},\"keywords\":[\"ETF\",\"etfs\"],\"articleSection\":[\"Intelligence\"],\"inLanguage\":\"en-USA\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.inovestor.com\/en-us\/2019\/01\/canadian-etfs-decembers-launches-and-terminations\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.inovestor.com\/en-us\/2019\/01\/canadian-etfs-decembers-launches-and-terminations\/\",\"url\":\"https:\/\/www.inovestor.com\/en-us\/2019\/01\/canadian-etfs-decembers-launches-and-terminations\/\",\"name\":\"Canadian ETFs: December\u2019s launches and terminations - 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