$108-billion ETF industry attracts big banks

Canadian ETF assets are $108 billion, spread among more than 500 different products, reports National Bank in an industry note. In 2016, the number of ETF providers increased to 18 from 12, with Hamilton Capital, TD Asset Management, Sphere Investment, Mackenzie, WisdomTree and Harvest Portfolios Group all introducing ETFs.

Canada’s six largest banks are increasingly involved, with Scotiabank the latest entrant to the ETF market. The banks facilitate ETF sales and trading, and many also provide liquidity for ETFs. Here’s National Bank’s summary of the non-trading aspect of the banks’ ETF participation:

• TD — Asset Management was early to the ETF market, first issuing four ETFs in 2001 and then delisting them in 2006. TDAM recently re-entered the ETF landscape with a suite of six passive funds launched in March 2016.
• National Bank — Since 2007, Financial Markets has provided counterparty exposure to many derivatives-based ETFs. The bank also provides the replication strategy to Morningstar for the Horizons Morningstar Hedge Fund ETF and is involved with the Morningstar National Bank Quebec Index, which is tracked by a First Asset ETF. The inception date for both ETFs is 2012.
• BMO — Global Asset Management launched ETFs in 2009. BMO is now the second-largest ETF provider in Canada, with $32 billion in ETF assets, or 30% market share. BMO Capital Markets was once the counterparty for a derivatives-based ETF.

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• RBC — Global Asset Management launched ETFs in 2011 and is known for its rule-based Quant ETFs and target-maturity bond ETFs.
• CIBC — Asset Management is a sub-advisor for a Horizons currency ETF launched in July 2016, with another ETF in the filings to be launched. CIBC World Markets has provided counterparty exposure to some derivatives-based ETFs and is also the index provider for several recently launched factor-based First Asset ETFs.
• Scotiabank — Through its subsidiary 1832 Asset Management and its Dynamic Funds product line, Scotiabank co-branded five ETFs filed by iShares. The ETFs are expected to launch in early 2017.

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