The exchange-traded fund (ETF) industry has appointed a new leader to represent the growing community of ETF providers and investors in the Canadian marketplace.
Atul Tiwari, managing director of Vanguard Investments Canada, has been elected as the new chairman of the Canadian ETF Association (CETFA). Mr. Tiwari replaces Howard Atkinson, the first chairman of CETFA.
"The first ETF was launched in Canada 25 years ago and the industry continues to see tremendous growth. The association does important work educating investors about ETFs," says Mr. Tiwari. "Investors are increasingly turning to ETFs for precise access to markets at a low cost, but there is still a great need for investor education."
The Association was formed in late 2011 by three of Canada's ETF providers including Horizons ETFs, BMO ETFs and Claymore Investments (which was acquired by BlackRock Asset Management in 2012).
"We came up with this concept because, unlike the U.S. where ETFs are represented by the ICI [Investment Company Institute], we didn't have an association that represented ETFs in Canada," says Mr. Atkinson, who is also president of Horizons ETFs. "This was the only way that we could truly have a voice."
Under Mr. Atkinson's mandate, the association grew from the three founding ETF providers, up to a total of 39 members consisting of ETF providers, affiliates and portfolio managers.
Canadian ETF assets reached $85.6-billion in May. Over the past year, total Canadian ETF assets under management has increased by 25 per cent, according to a weekly ETF flow report by National Bank Financial. Although it it still far behind the $1.22-trillion that Canadians hold in mutual funds as of April 30, 2015.
As regulatory requirements shed greater transparency around the fees and performance of mutual funds in mid 2016, the ETF industry could see a boom in sales. In addition, CETFA has played a crucial role in opening the doors for investors to gain greater access to ETFs – which would also result in a growth spike.
Currently, investors can only access ETFs through a discount brokerage or a securities licensed adviser (including a robo-adviser platform).
The initiative to give investors more avenues to buy ETFs saw CETFA work closely with a number of industry groups including the Mutual Fund Dealer Association and the Federation of Mutual Fund Dealers. Last month the group announced mutual fund dealers would soon be able to provide mutual fund advisers access to an exchange to purchase ETFS for their clients through a partnership with custody and trade execution provider National Bank Correspondent Network (NBCN).
"This is a development that we will continue to work together as an industry to get wider usage and penetration of ETFs," says Mr. Tiwari. " We want to continue to look at areas such as in the retirement space, where ETFs have not generally been used to any great extent in defined contribution plans or personal retirement vehicles in Canada."
Mr. Tiwari will also continue to promote a CETFA initiative that will provide ETF companies with adviser or branch information of the companies selling their ETFs. Mutual fund companies already receive such information. The project is still on-going and if implemented, could result in a surge of ETF sales within the Canadian marketplace.