Who were the top ETF providers during 2021?

With a total asset value of US$255 billion and net sales of US$39 billion—strong increases over 2020—Canada's exchange-traded fund (ETF) sector wrapped up a record-setting 2021, showing promising development as advisors and individual investors embrace the structure.

There are already 42 issuers and over 1,100 products in the market. And according to a new report from global research firm Cerulli, there is still a huge opportunity for growth as a wide range of users become more familiar with the (usually) lower-cost structure and regulatory adjustments take hold.

“As of year-end 2021, Canadian funds of funds held USD 18.2 billion, suggesting a true market size (non-funds of funds and U.S. funds of funds) of USD 255 billion—a five-year compound annual growth rate (CAGR) of 26%,” Cerulli said in its report.

While the top ten ETF issuers have stayed consistent since 2020, there have been significant differences in flows between product lines. The following are the top ten Canadian ETF issuers by AUM at the end of 2021, according to Cerulli, along with their 2021 net flows and year-on-year asset growth:

1. iShares – Assets, US$72.8 billion; Net Flows, US$6.8 billion; YOY asset growth, 28%

2. BMO – Assets, US$68.3 billion; Net Flows, US$7.7 billion; YOY asset growth, 27%

3. Vanguard – Assets, US$32.1 billion; Net Flows, US$7.06 billion; YOY asset growth, 50%

4. Horizons – Assets, US$15.9 billion; Net Flows, US$1.37 billion; YOY asset growth, 25%

5. CI Investments – Assets, US$11.9 billlion; Net Flows, US$1.9 billion; YOY asset growth, 32%

6. Mackenzie – Assets, US$10 billion; Net Flows; US$3 billion; YOY asset growth, 52%

7. TD – Assets, US$6.6 billion; Net Flows, US$2.2 billion; YOY asset growth, 90%

8. Purpose Investments – Assets, US$4 billion; Net Flows, US$824.3 million; YOY asset growth, 27%

9. National Bank (Canada) – Assets, US$3.9 billion; Net Flows, US$1.3 billion; YOY asset growth, 57%

10. Invesco – Assets, US$36 billion; Net Flows, US$73.8 million; YOY asset growth, 18%

Vanguard and BMO emerged as leaders in net sales, as each garnered over US$7 billion in inflows throughout 2021. BlackRock’s iShares line in Canada wasn’t able to cross that milestone last year, which put it in third place.

And while Harvest ETFs wasn’t among the top 10, it got an honourable mention as it doubled its assets year over year off the back of a successful thematic product line. Among the top 10 issuers by AUM, TD gained the highest YOY asset growth at 90%, while Invesco lagged at 18%.

Cerulli’s research also indicated that as people become more concerned about the environment and social issues, the case for ESG products is growing stronger. However, investors may be more interested in impact and thematic offerings than those that can be linked to greenwashing.

Based on a survey of Canadian ETF issuers, Cerulli found that the top five major drivers of ETF Asset Growth last year were:

1. Increased use of active ETFs (cited by 50% of respondents as a major driver)
2. Advisor movement toward fee-based practices (45%)
3. Advisors increasing existing allocations (35%)
4. Increased advisor use of third-party strategists or asset allocation models (30%)
5. Adoption of ETFs by first-time users (25%)