He added that Canada’s trend-setting is primarily due to Canadian regulatory agencies being a little more relaxed than the US about launching new products, so Canadian ETF providers may hit the market sooner. The US has now filed crypto-backed ETFs, which are expected to hit the market this year.
Eng attributes the phenomenal growth of ETFs to a more educated marketplace where people now know that ETFs cost less, have trading flexibility, and have a vast selection of products, and are more comfortable to use. Mutual funds are still very expensive in comparison.
“The Canadian market has the highest management fee for mutual funds among all developed markets,” he said. “It’s gone down quite a bit over the years, but it’s still very high. So, relative to mutual funds, ETFs look like a very attractive product to invest in.”
While it’s difficult to predict what the next big trend will be, England expects another record-breaking year for influx and product launches. He believes that is especially true for the ESG, which was the second major growth area in 2021. Even though ESG achieved inflows of $4 billion in 2021, ESG-related ETFs comprised only 3% of total assets under management. There are now 100 products – passive, active and thematic – with 40 launched in 2021.
“It’s a strength, as well, and we’re probably going to see more ESG-related products coming to market as demand continues to rise,” Engie said.