From the amount of attention they get, you’d never guess that exchange-traded funds in Canada represent just a small fraction of the money held in mutual funds.
Clearly, a lot of investors are still in exploratory mode with ETFs and not yet ready to buy. Here are a few stats about ETFs that may help give them confidence to actually try ETFs as a replacement for costly mutual funds that disappoint or stock-picking that generates mediocre or worse results:
64/32.3/3.7
That’s the percentage breakdown of ETF assets in Canada between stocks, bonds and other miscellaneous categories. On the whole, money in ETFs is invested in a sensible, balanced sort of way.
20.9 per cent
That’s the proportion of ETF assets in Canadian stocks, compared with 20.1 per cent for U.S. stocks, 8.7 per cent in international stocks and 2.2 per cent in emerging markets (money is also invested in sector funds). Again, this is a sensible breakdown. You could fault investors for not having more international content, but this is a category that has never consistently delivered strong returns. The emphasis on U.S. stocks has really paid off in recent years.
$174-billion
That’s the amount invested in ETFs offered by the four largest companies in the field – BlackRock, Bank of Montreal (BMO), Vanguard and Horizons. These companies tend to be most competitive on fees, which means a lot of investors are in a position to benefit from the low-cost advantage of ETFs over mutual funds.
$4.2-billion
Here we have the amount of net sales for ETFs in June, which compares with $3.9-billion for mutual funds. Mutual funds had net assets of $1.6-trillion at mid-year, compared with $218-billion for ETFs. From a much smaller base, ETFs are generating more interest from investors.
$10.6-billion
The largest ETF in Canada, the BMO S&P 500 Index ETF (ZSP), has this much in assets. Good choice, investors. The management expense ratio for this definitive index for investing in U.S. stocks is just 0.09 per cent.
93
This is how many new ETFs were launched in the 12 months to June 30, bringing the total for the Canadian market to 808. The burden on investors to find good funds gets bigger. For help, try the Globe and Mail 2020 ETF Buyer’s Guide.
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Rob Carrick