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TD Canada Trust Bank Sign at the TD Tower on King Street in Toronto.Ryan Carter/The Globe and Mail

Soon after Toronto-Dominion Bank returned to the exchange-traded fund business with the launch of six funds late last month, speculation immediately turned to what the bank would introduce next. Is a TD robo-adviser in the works?

After all, ETFs – which resemble index mutual funds but trade throughout the day like stocks and have ultra-low fees – can be seen as gateways to the creation of these online investment management services. That's because the appeal of a robo-adviser stems from its low cost and simplicity, and ETFs add to these features.

Tim Wiggan, chief executive officer of TD Asset Management, pointed out in a recent interview that a bank wouldn't necessarily need a slate of ETFs to create a robo-adviser – but it helps.

He said that robo-advisers have three levels: advice based on a customer's risk tolerance, a platform that automatically rebalances investments, and what Mr. Wiggan calls "the underlying ingredients" or ETFs.

"You can be the adviser and the platform without owning your own ETFs," he said. "But I think if we were to launch a robo-adviser in the future it would make sense – given our competitive position today – that we have as many of those three levels as possible."

The new ETFs, he added, give TD "quite a bit of optionality at a time where there is a lot of change. There is always change in our business, but I refer to today's change as a seismic shift."

New players in the financial landscape globally are sprouting up consumer-friendly alternatives to many traditional services offered by the banks, from online lending to payments, and robo-advisers fit into the trend.

Some banks have been hitting back. Bank of Montreal recently launched its SmartFolio, which is essentially a robo-adviser that matches investors with one of five ETF portfolios, drawn from BMO's slate of 65 funds that have been launched since 2009.

So far, TD's ETF offerings – international, U.S. and Canadian equity index funds, two of which have versions hedged to Canadian dollars, and a Canadian government and corporate bond index – are considerably narrower.

They respond to rising popularity among retail and institutional investors: ETF assets in Canada alone rose above $95-billion at the end of the first quarter, up from nearly $90-billion at the end of 2015, and that's during a volatile time for markets.

The new funds also give TD the opportunity of offering funds without having to surrender management fees to another provider. In the case of TD's ETFs, these fees range from 0.07 per cent for a fund that tracks the S&P/TSX composite index, to 0.18 per cent for funds that track international equities – low for consumers but enough to translate into more than $1-million on assets of $1-billion.

The ETF launch was also relatively easy for TD, given that it had more than $100-billion in assets under management and a lengthy history of managing passive investments.

"In terms of what we can do, and our know-how, this is not a big leap," Mr. Wiggan said.

"It doesn't seem to make sense as one of the largest asset managers in the country with these capabilities not to launch our own ETFs," he added. "That's really what this was. We didn't need to add new capabilities. We just needed to go through a routine filing to get these six ETFs up and trading."

Nevertheless, he's not ruling out further developments as Canada's big banks respond to changes in regulations, demographics, technology and competition.

For starters, Mr. Wiggan said that TD would be looking at launching actively managed ETFs, which are led by fund managers instead of passively tracking an index. And the new ETFs certainly give TD the opportunity of adding a robo-adviser later on.

"It is much easier for us to start today and think about two to three years down the road, than all of a sudden, if we were to go that route, to have someone turn to me and say 'Where are your ETFs?'" Mr. Wiggan said.