Expert shares how advisors and DIY investors have contributed to this shift
Exchange-traded funds (ETFs) are increasingly becoming the preferred choice among investors, gradually replacing mutual funds, individual stocks, and bonds as core portfolio holdings, according to a Canadian market expert.
Carlos Cardone, managing director at ISS Market Intelligence Canada, told BNN Bloomberg on Thursday that ETFs are seeing widespread uptake across all investor channels. He noted that both advisor-led and self-directed investors are contributing to this shift, with significant ETF allocations appearing in both full-service and online brokerage accounts.
“There’s approximately $190 billion in ETFs in both channels, a little bit more on the self-directed side, and ETFs in both channels have been growing tremendously over the last several years, and this is connected, of course, to more products becoming available,” said Cardone.
He emphasized that ETFs are displacing traditional investment products across the board. “ETFs are not only replacing mutual funds in some cases…but also direct securities. We see ETFs gaining ground to pretty much everything that is in these channels, direct securities, direct bonds and so in many cases our assets are increasingly going toward ETFs in both channels.”
Growth has been especially pronounced in the self-directed investing space, where ETF assets surged more than 50% over the past year. In comparison, full-service brokerage ETF holdings increased by about 30% over the same period.
Cardone added that investment managers are increasingly expanding their ETF offerings to meet rising demand. “This is not a newer phenomenon. It’s something that has been developing over the last several years. It’s very global,” he said.
“We have seen the immersion of active strategies in ETFs several years ago, something that started actually in Canada for the most part and then became more of a global trend.”
Cardone’s insights follow a milestone year for ETFs in Canada. As reported by Bloomberg News in January, ETF assets topped $500 billion in 2023, with record-breaking inflows and an unprecedented number of new products entering the market.
