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Unitholders of the 11 ETFs from Emerge Canada Inc. finally know when they can access their investments.

Emerge Canada announced Thursday that it will terminate its entire ETF family “on or about Dec. 20, 2023,” liquidating the holdings and returning the assets to unitholders. Units of the ETFs will be delisted from the Neo Exchange on or before Oct. 23.

The ETFs have been untradeable since the Ontario Securities Commission (OSC) placed a cease-trade order (CTO) on all 11 of Emerge Canada Inc.’s ETFs on April 6. The CTO was placed because Emerge missed the March 31 deadline to file audited annual financial statements. Emerge’s auditor, BDO Canada LLP, had resigned the previous November and has still not been replaced. The order represented the first time a CTO had been placed on a family of ETFs in Canada.

On May 11, the OSC suspended Emerge Canada’s registration for capital deficiency, stating that the firm was likely deficient at some point prior to Sept. 30, 2022. The OSC permitted Emerge to conduct an orderly wind-down of its current business, including the 11 ETFs. The regulator also allowed Emerge to have another firm assume responsibility for the ETFs.

“There was an interested buyer, but the amount of time they were needing to close the deal was too long and would have pushed back the date for unitholders to receive funds into the new year,” said a spokesperson for Emerge Canada in an email to Investment Executive.

Once the ETFs are terminated, investors will receive the net proceeds from the liquidation of the ETF’s assets, minus all liabilities and all expenses connected to the dissolution of the ETF, on a pro-rata basis.

This means unitholders may not receive their full net asset value, particularly because Emerge Canada has not repaid money it owes the ETFs it manages.

As reported by Investment Executive in April, Emerge’s six ARK ETFs were owed more than $2.5 million in receivables from Emerge as of June 30, 2022 — an amount that had grown more than fivefold over two-and-a-half years. The OSC’s May decision revealed that receivable had increased to $5.5 million, which represents about 5% of the assets held in the ARK ETFs as of May 10.

Emerge Canada stated in its release Thursday that if it still has not repaid the receivable by the termination date, “Emerge Canada will be responsible to pay investors of that ETF their pro rata portion of the receivable … at a future date.”

A spokesperson for RBC Treasury Services confirmed that RBC remains the custodian of the Emerge ETFs and that the ETFs continue to have value.

The last communication from Emerge to its unitholders prior to today was May 15.

Yves Rebetez, partner with Credo Consulting Inc. in Oakville, Ont., said investors were put under unnecessary stress due to the prolonged radio silence from Emerge.

“There was insufficient communication and clarity around the timeline [for resolution], and that’s not really acceptable,” Rebetez said. “I think there is inherently a greater burden of responsibility that should fall on both the industry and the regulator to provide answers.”

As for next steps, “Emerge Canada strongly encourages investors in the ETFs to consult with their financial advisors to understand the financial and tax implications associated with the termination of the ETFs and to discuss their investment options,” the firm stated in the release.

The OSC reiterated Emerge’s comment, with a spokesperson stating in an email that “we encourage investors in the ETFs to consult their advisors about this announcement.”

However, Investment Executive has spoken to numerous investors who do not have financial advisors.

Manny, a data analyst based in Ontario, invested about $2,000 in Emerge’s flagship Emerge ARK Global Disruptive Innovation (EARK) fund — about 6% of his total portfolio — because he was drawn to the ARK strategy. ( agreed to identify Manny by his first name only, and spoke to him before today’s announcement.)

“[I wanted] to get some exposure to the disruptive innovation industry, and I’m a firm believer in these new technologies,” he said, adding that he understood the investment was speculative and risky. “I followed Cathie Wood quite a bit during the pandemic and her ideas about the future. It was quite inspiring.”

Emerge launched five ETFs in 2019 based on Cathie Wood’s ARK funds (plus a sixth in 2021) and five EMPWR active ESG funds in 2022 that were managed by women.

When the CTO was imposed, “I was shocked, and a little disappointed,” he said, particularly because he had been drawn to Emerge’s message of female empowerment. Manny said he didn’t have specific plans for the $2,000, but wanted to “watch it grow over the years because I don’t expect to touch the money in my investment portfolio, because I’m [under 30].”

In the months since the CTO, Manny said he’s become more skeptical about disruptive innovation and riskier equities, though he hasn’t given up on investing altogether. Instead, the CTO experience has “taught me to do more learning and research, not just about equities alone, but also about rules and regulations and what’s required from firms that deal with ETFs,” he said.

Frank Soodaye, a DIY investor in Mississauga, Ont., began gradually investing in EARK starting in June 2022, putting in about $16,000 — about 10% of his portfolio — up until trading was halted in April. Like Manny, he was attracted to the opportunity to invest in the ARK strategies in Canadian dollars.

Soodaye said he understood the position was risky when he invested, but didn’t expect to be trapped in EARK for more than six months. He added that he did research on EARK itself, but not on Emerge Canada Inc.

Soodaye said he doesn’t plan to invest in ETFs any longer, preferring instead to invest in individual equities. “If I’m going to research the company anyway, I might as well buy the company directly. Because [having a fund manager creates] an additional risk for me, based on this experience.”

Other investors Investment Executive spoke to said they were more wary of ETFs, and would only invest with well-known ETF manufacturers such as Vanguard or BlackRock.

This outcome is an unfortunate side effect of the Emerge debacle, Rebetez said.

“As someone who likes the ETF as a distribution vehicle and recognizes some of its superior attributes — [such as] diversification, ease of access and liquidity — it pains me that somebody paints the entire space with the same brush because of their bad experience,” Rebetez said.

BMO Global Asset Management continues to offer Canada-listed versions of three ARK funds.

The Emerge CTO has prevented investors from cashing out after recent gains for some of Emerge’s ARK ETFs.

The ARK suite rebounded from significant underperformance to post returns ranging from 18.47% to 41.95% for the year to June 30.

Performance has since moderated. As of Sept. 30, EARK’s return is 23.90% for the year to date, and 2.37% over one year, according to data from Morningstar. Year-to-date returns were strong for four of the remaining ARK ETFs, ranging from 9.43% to 32.72%, but the genomics and biotech ETF returned -0.35% for the year to Sept. 30.

For the three years ended Sept. 28, all ARK ETFs with sufficient data were bottom quartile — with three dead last in their category.

As for the EMPWR ETFs, returns for the year ended Sept. 30 range from -6.16% to 8.89%, according to Morningstar. Over the same period, three of the five ETFs were bottom quartile, one was third quartile and one was top quartile.

Emerge ETFs timeline

  • April 6: Cease-trade order issued on all 11 ETFs managed by Emerge Canada Inc.
  • April 14: Investment Executive reports that Emerge Canada’s suite of six ARK ETFs is owed more than $2.5 million in receivables from Emerge
  • May 11: Emerge Canada suspended for capital deficiency
  • May 15: Last public statement from Emerge Canada prior to today
  • July 14: Liquidation date for the U.S. versions of the five EMPWR ETFs
  • Sept. 15: Date on which Emerge ETF Trust, which managed the five U.S. EMPWR ETFs, applied to the U.S. Securities and Exchange Commission to deregister
  • Oct. 19: Emerge announces it is liquidating its 11 ETFs
  • Oct. 23: Units of the Emerge ETFs will be delisted from the Neo Exchange by this date
  • Dec. 20: The 11 ETFs will be liquidated on or before this date