Blomberg Intelligence report also considers the role of active management
The role of active management in Canada’s leading position in the ETF space is examined in a new report from Bloomberg Intelligence.
The data-driven research from strategist Athanasios Psarofagis says that Canada already has a larger share of its ETF assets in active management than other regions – 24% of assets are actively managed, three times that of the US (8%) and twelve times that of Europe and Asia (2% each). Most (88%) of total Canadian fund assets are in actively managed strategies.
The consideration of fund managers to expand the range of strategies they offer could accelerate the shift to ETFs from mutual funds. Currently ETFs have an 18% share of the Canadian fund industry’s total assets.
The latest IFIC data shows that net sales for ETFs in $5.5 billion in September compared to just $790 million for mutual funds. Mutual fund assets are far higher of course at almost $2.9 trillion compared to $479 billion for ETFs.
New ETF launches favour active management with the report showing that a record high of 71% of new funds in 2024 are actively managed and 30% of total industry flows have gone to active ETFs.
While the largest Canadian ETF providers have a larger share of ETF assets in passive strategies, this changes for smaller providers with BMO having 30% of its ETF assets in active management. Bloomberg Intelligence expects larger ETF providers to increase their active lineups.
Looking at the types of Canada’s active ETFs, 53% are equity, 36% fixed income, 21% income/derivatives based, and 6% are mixed allocation.
