Jamie Purvis was also part of the opening Ceremonies. His talk was entitled “The current State of the ETF Market and the Types of ETFs Available in Canada”. Jamie Purvis is Executive Vice President of Horizons Exchange Traded Funds Inc. The link to their site is here.
Horizons sell Alpha, Benchmark and BetaPro ETFs in Canada. In 2009 ETFs were at 24 Billion. Today they are at 103 Billion. People are buying ETFs because of low fees. The 3 year growth in Mutual Funds is at 25%. The 3 year growth in ETFs is 63%. There were few providers in Canada when Horizon came to Canada. Soon all Canadian Banks will be in this market.
ETFs will continue to grow. They are 5% of the market now. By 2024 they will be 18% of the market. Indexing is your best default investment. However, indexing is not a one-size-fits-all solution. Index ETFs are highly liquid, transparent and have breath of security. ETFs however are not effective for preferred shares, corporate bonds, high yield bonds, senior loans, alternative or municipal bonds.
The benefits of ETFs is they are efficient, they have improved tracking errors (but tracking is limited by fees), have lower fees, and no income is received so income is reinvested so they can track total return indexes.
New ETFs are strategic Beta (or smart Beta). They use passively managed index strategy or use capital weighting. Types of strategies include equal weighting, fundamental index or low volatility. These are the popular strategies. Others are leverage ETFs which provide double or triple inverse exposure to daily performance of underlying benchmark. You will never lose more than invested and there is no margin call risk.
We now also have active managed ETFs.
On my other blog I wrote yesterday about Granite REIT (TSX-GRT.UN, NYSE-GRP.U)... learn more. Tomorrow, I will write about Le Chateau Inc. (TSX-CTU.A, OTC-LCUAF)... learn more on Wednesday, October 04, 2016 around 5 pm.
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