BMO Global Asset Management (BMO GAM) Friday released its bi-annual BMO 2015 ETF Outlook Report, which examines growth opportunities for Exchange Traded Funds (ETFs) and the industry’s challenges for 2015.

According to the report, the Canadian ETF industry experienced significant growth in 2014, with more than $10.3 billion in inflows — double the flows seen in 2013.

Equity ETFs alone experienced $5.8 billion in inflows in 2014 and fixed income ETFs had impressive inflows of more than $4.3 billion.

At the end of 2014, the Canadian ETF industry’s assets under management (AUM) stood at $76.8 billion, up 21.7 per cent over year-end 2013.

There are now 360 ETFs listed in Canada, compared to just over 100 ETFs five years ago.

The U.S. ETF market achieved a significant milestone last year, with just over US$2 trillion in AUM at year-end — 17.8 per cent higher than the previous year.

More generally, the global ETF industry reached a record AUM of US$2.7 trillion invested in over 5,000 ETFs across 49 countries.

Looking ahead, the report forecasts increased use of ETFs by investors and advisors, with investors seeking out low volatility products, in particular.

It notes that effective asset allocation ETFs can provide and their low costs create an attractive combination for both investors and advisors.

The report suggests the trend of smart beta ETFs will continue, as investors seek alternatives to traditional market capitalization weighting with ETFs that use factors that have enhanced risk adjusted returns over the long term.

The report notes that the growth and popularity of ETFs will bring more competition through both new providers and existing providers launching new products. With greater competition, a challenge that investors will face is determining the right product for them and the right provider to access those products.

“ETFs have become a mainstream investment type for all kinds of investors and have come a long way since the first ETF was launched in Canada in 1990,” said Rajiv Silgardo, co-CEO, BMO Global Asset Management, in a news release.

“As more investors and advisors leverage ETFs in new and different ways, we expect that over the next five years, the Canadian ETF industry will experience a faster growth rate than the global average and will reach $200 billion in assets under management.”