The exchange-traded fund marketplace in Canada is set to become more competitive and more comprehensive in product offerings, the executives of ETF providers said on Tuesday.

During a panel discussion on ETFs at the Toronto Stock Exchange, the executives noted the rapid growth of ETF products and assets in the past year.

Tom Kloet, CEO of TMX Group, said the number of ETF product listings on the TSX had advanced sharply this year, rising to 102 products. He said exchange traded funds represented 37% of new listing activity in 2009, and he added that ETF trading activity in 2009 has already surpassed 2008 levels.

But the industry is still in its infancy, and maintains substantial potential for growth, the panelists said. Rajiv Silgardo, head of the ETF unit at BMO Financial Group, said the rising demand for the products would surely lead to greater competition among ETF providers.

“It’s highly likely that there will be other competitors,” said Silgardo. “As the market gets bigger, it’s a given.”

A particularly strong area of growth in the ETF marketplace has been fixed income products, according to Heather Pelant, head of iShares at BGI Canada.

“I think 2009 was the year of the fixed income ETF in Canada,” she said, noting that assets in these products have surged rapidly.

Pelant noted that once investors try out ETFs as a means for exposure to fixed income investments, they typically continue using the products and gradually expand their exposure to the products.

Howard Atkinson, president of BetaPro Management Inc., said fixed income ETFs would likely continue to be a major source of growth in the ETF industry going forward, particularly since aging baby boomers will be seeking conservative investments. In addition, he pointed out that these types of ETFs could gain momentum as interest rates begin to rise in the next few years.

Jeff Logan of Claymore ETFs said he expects new types of fixed income ETFs to emerge as the products continue to gain popularity. Other areas of growth in terms of ETF products could include commodity and currency ETFs, Logan said.

In addition, the executives agreed that actively managed ETFs would comprise a major area of growth for the industry.

Larry Berman, partner and chief investment officer at ETF Capital Management, which builds investment portfolios using ETFs, warned that as new ETFs emerge, it’s important for investors and advisors to do their research. In particular, he noted that liquidity is often a concern.

“Liquidity is number one,” said Berman. He explained that it is one of the most important factors to consider before investing in ETFs, since the ability to quickly trade in and out of the funds is a key aspect of their appeal.

IE