Canada’s ETF Scene Heats Up: Active, Leveraged, and Gold Strategies Make Waves

Canada’s ETF Scene Heats Up: Active, Leveraged, and Gold Strategies Make Waves

  • 02.06.2025 15:56
  • theglobeandmail.com
  • Keywords: ETF Innovation, Active Management, Leveraged Funds, Gold Exposure

Canada’s ETF market is thriving with new offerings from Manulife, LongPoint, and BMO. These include active income funds, leveraged ETFs, and gold strategies, catering to diverse investor needs.

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Estimated market influence

Manulife Investment Management

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rolled out four new ETF series targeting fixed income and equity with active management focus on income and quality growth

LongPoint Asset Management

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Analyst rating: N/A

launched Canada’s first locally listed 3X leveraged and inverse ETFs, offering amplified exposure to major indices and sectors

BMO Asset Management

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Analyst rating: N/A

introduced a new suite of actively managed ETFs shaped by the insights of Brian Belski, Chief Investment Strategist at BMO Capital Markets

Context

Analysis of Canada’s ETF Scene: Key Insights and Market Implications

Overview

Canada’s ETF market is experiencing significant innovation, with major players introducing specialized products to meet investor demand for tailored solutions. The launches by Manulife, LongPoint, and BMO highlight trends toward active management, leveraged strategies, and gold exposure.

Manulife’s Active ETF Series

  • Products: Four new ETFs targeting fixed income and equity strategies.
    • A bond-focused ETF combining government and corporate bonds across credit tiers for optimized returns.
    • Equity funds targeting dividend growth, including global, Canadian, and multi-country strategies.
  • Key Features:
    • Low-cost, intraday-traded vehicles.
    • Focus on income and quality growth.
  • Market Impact: Provides advisors with new tools for constructing resilient portfolios, emphasizing active management.

LongPoint’s Leveraged ETFs

  • Products: Canada’s first 3X leveraged and inverse ETFs, traded in Canadian dollars.
    • Sectors covered: Canadian banks (BNKU), gold miners (CGMU), and U.S. Treasuries (TLTU).
    • Inverse ETFs offering -3X exposure.
  • Upcoming Launch:
    • Single-stock leveraged ETFs targeting U.S. tech names like Coinbase (COIU CN) and MicroStrategy (MSTU CN).
  • Fees: 1.55% management fee.
  • Market Impact:
    • First-of-its-kind products in Canada, catering to high-risk traders.
    • Potential for increased volatility and competition in leveraged ETF space.

BMO’s Strategist-Led ETFs

  • Products: Actively managed ETFs developed by Brian Belski, BMO’s Chief Investment Strategist.
    • Diversified equity and fixed income options with hedged and unhedged units for currency risk management.
    • U.S. equity-focused ETFs with strategic positioning.
  • Gold Income Strategy:
    • ZWGD provides exposure to gold bullion with income generation through covered call spreads.
  • Market Impact:
    • Enhances BMO’s competitive position in active management.
    • Attracts investors seeking diversified exposure and inflation protection.

Market Trends and Implications

  • Increased Competition: The launches by Manulife, LongPoint, and BMO signal heightened competition in Canada’s ETF market.
  • Tailored Solutions: Investors demand more specialized products, driving innovation in active management and leveraged strategies.
  • Gold’s Growing Role: The inclusion of gold income ETFs underscores the growing interest in alternative assets for diversification and inflation hedging.
  • Leveraged ETFs: High-risk, high-reward products like LongPoint’s 3X leveraged ETFs cater to sophisticated traders, potentially increasing market volatility.
  • Regulatory Considerations: The rise of leveraged and inverse ETFs may attract regulatory scrutiny, particularly regarding investor suitability.

Competitive Dynamics

  • Manulife: Strengthens its position in active management with low-cost ETFs targeting income-focused investors.
  • LongPoint: Pioneers leveraged and single-stock ETFs, positioning itself as a disruptor in the Canadian market.
  • BMO: Leverages its investment research capabilities to offer strategy-led ETFs, competing with traditional asset managers.

Long-Term Effects

  • Investor Choices: The proliferation of ETFs provides investors with greater flexibility and precision in portfolio construction.
  • Market Impact: May lead to increased market participation, particularly among retail investors seeking tailored exposure.
  • Industry Evolution: The trend toward specialized ETFs could drive further innovation and differentiation among issuers.

Conclusion

Canada’s ETF market is evolving rapidly, with major players offering innovative solutions to meet investor demand. The launches by Manulife, LongPoint, and BMO underscore the growing sophistication of Canadian investors and the competitive dynamics shaping the industry. These developments are likely to have long-term effects on market participation, product innovation, and regulatory considerations.