6 months since taking the reins at BMO ETFs, Sara Petrcich offers reflections on lessons learned and outlooks on where BMO and the ETF industry are headed
Sara Petrcich sees it as her responsibility to innovate. The managing director and head of ETFs & structured solutions at BMO Global Asset Management is about six months into her new position leading one of Canada’s largest ETF issuers by AUM. While she's still relatively new, Petrcich is already focused on the next stage of growth for BMO’s ETF business.
She highlights BMO GAM’s level of client service as a potential engine for future success and she sees room to innovate. Even though the Canadian ETF industry is fast approaching 1,500 exchange traded funds, Petrcich thinks the product shelf isn’t too crowded yet. She thinks the whole industry has room to grow. Even within a large institution, Petrcich sees her new position as both the means and the motive for BMO GAM’s push towards new ideas in ETFs.
“I happen to be in the right place at the right time,” Petrcich says. “BMO’s strategic vision is innovation, and my boss, BMO GAM’s CEO Bill Bamber has a similar background to me, which is creating these products in capital markets, risk managing these products, and having sat in the trading role in capital markets. That means we have an intimate connection to how these products work in a portfolio.
“The fact that we’re here, doing this, signals where the industry is moving towards.”
Recent history will also inform innovation. In their ETF industry outlook published last week, BMO GAM outlined some of the major trends that shaped 2023. Namely, a focus on interest rates that drove investors into GICs and cash products. There was also geopolitical upheaval and ongoing uncertainty that made investors and advisors more tactical in their allocations.
Petrcich says that BMO GAM’s solution to these trends has been to develop suites of products that are aligned with how the investor sees the market playing out. There was also a push towards defined outcome ETFs to counterbalance much of the uncertainty on the market. That’s one trend that Petrcich sees extending into 2024.
As some of last year’s trends remain intact, and others give way to new forces, Petrcich believes that the whole ETF industry will continue to innovate to meet investor appetites. While there are already plenty of competing products on the market, Petrcich believes there is still space for new ETFs because of the uniqueness of each ETF issuer.
“If you look at all of the different ETFs out there, we all do things a little bit different,” Petrcich says. “Vanugard, Blackrock, Horizons, BMO, none of us are really trying to be each other per se, and that leaves room for the shelf to continue expanding.”
Demand is a key factor in that continued growth. Index tracking ETFs are now being sought after with covered call overlays. Sector specific versions of strategies are being sought so investors and advisors can play different outcomes of major stories for the year, such as the upcoming US election. Petrcich says the challenge and the opportunity for BMO GAM and other ETF issuers is to meet this demand with products that can creatively deliver the kind of exposure to major themes and trends that investors are asking for.
As they push to innovate, Petrcich says that advisors can expect a wide array of new products and themes to come from BMO GAM. Those include more of the defined outcome products that BMO is already seeing strong demand for. It also includes liquid alts strategies and other products that can serve investors across the risk spectrum. As she looks ahead to her continued work and leadership at BMO GAM, Petrcich wants advisors to know that she wants to build them as advanced a toolkit as she can.
“If there’s any message we could telegraph out to the advisor community, it’s that we really want to build their toolkit in our suite of products,” Petrcich says. “It’s going to take longer than a year for us to do this, but longer-term my goal is that if you’re an advisor and you want to participate in Tesla, for example, there’s probably 20 different ways you can buy it that aren’t just buying the stock… I think that the whole Canadian ETF industry has a lot of upside, and I think we’re really well positioned right now to best serve our clients.”
