ETFs are playing an increasingly important role in the investment portfolios of Canadians, with nearly one-third of Canadian investors (31%) reporting they own such funds, according to BlackRock Canada’s first ETF Pulse Survey.
Its findings suggest more investors will own or add exposure to ETFs going forward, given most ETF owners (93%) and non‐owners (38%) show an interest in purchasing ETFs over the next 12 months.
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The survey looked at ETF awareness and usage amongst Canadians, and found education often plays a central role in fund adoption. More than half of Canadian investors are planning on learning more in the coming year. And, those who don’t currently own ETFs are more than twice as likely to seek out knowledge in the coming year, compared to the last 12 months.
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The survey says the majority of non-ETF owners expect to begin using ETFs in the near future, with 62% of non-owners expecting they’ll begin to use the funds in the next three years. Once invested, ETF owners say they appreciate the low management fees (51%), low transaction costs to buy and sell (34%), and the ability to diversify and reduce risk (34%).
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How ETFs are being used
The investors surveyed are choosing ETFs largely to replace mutual funds (41%) and/or individual stocks (45%), or to improve diversification (53%) and reduce their risk profile (43%).
These findings are consistent with a Greenwich survey of Canadian institutional ETF usage, which points to an increase in allocations among institutional investors in the coming year.
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So far, retail ETF owners currently allocate 20% of their assets on average, compared to individual stocks (24%) and mutual funds (22%). Further, 71% of investors who own the funds see them as long-term investments or, as both long and short-term holdings, with the average holding period being five years.