Close of businesswoman making announcement in paper trumpet

Tammy Cash
Tammy Cash, co-head, Women in ETFs Canada, and EVP, head of marketing with Horizons ETFs Management (Canada) Inc.

The next big ETF innovation is probably already here. Responsible investing is revolutionizing how we think about our money and moral obligations as investors. We have seen a rapid rise in responsible investing ETFs coming to market and in assets under management growth, a lot of which is being spurred by women and millennial investors. The latter is poised to be a disruptive investor demographic with generational wealth transfer. Advisors in Canada are starting to wake up to the reality that they can’t just be growth managers anymore; they must also be stewards of ethical investment decisions.

Jos Schmitt
Jos Schmitt, president and CEO of NEO Exchange Inc.

Growth in Canadian ETFs is hindered by how closing prices are set: the last price traded on the listing exchange only. ETFs are traded across multiple marketplaces, and the last price traded on the listing exchange may not properly represent the value of the underlying assets at close, generating valuation distortions that keep investors away. Considering the last price traded across all marketplaces and replacing it with the time-weighted national best bid/offer midpoint price if no trade occurred in the last 15 minutes is more representative. Industrywide adoption of this approach will particularly unleash Canadian actively managed ETFs.

Graham MacKenzie
Graham MacKenzie, head of business development, ETFs, CEFs & structured notes, Toronto Stock Exchange

While we expect the ETF industry and its products to continue to evolve, it’s important to recognize the ETFs that laid the foundation for the next iteration of products are still very relevant today. We expect to see new portfolio, ESG and liquid alternative ETFs as current providers expand their product mixes and new entrants come to market.

When, if ever, will ETF creation peak in Canada, and why?

Michael Cooke
Michael Cooke, vice chair, Canadian ETF Association and senior vice president & head of ETFs at Mackenzie Investments

Against the backdrop of a global pandemic, geopolitical tensions and economic uncertainty, Canadian ETFs are on pace for a record year with more than $22 billion in [net inflows] in the first half of 2020. This is consistent with trends dating back to the inception of the ETF industry in 1990: ETFs have proved to be resilient in good and bad markets, and relevant to both retail and institutional investors. The future of the industry is likely to see more investors making larger allocations to ETFs, which should result in continued growth for Canadian and global markets. [Therefore], peak demand for ETFs looks to be many years in the future.

Pat Dunwoody
Pat Dunwoody, executive director, Canadian ETF Association

We have seen a slowdown in the number of ETF sponsors coming to market recently. However, ETFs continue to launch with new and, in some cases, refined mandates. There are [more than] 4,000 mutual funds plus all the various classes and still [fewer than] 1,000 ETFs. Also, ETFs represent only 11.8% of the investment fund market. If advisors and investors continue to turn to ETFs as an investment choice, growth in the number of ETFs will continue albeit in a more controlled way as sponsors are able to better understand what the advisors and investors want.