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 20:00
  • theglobeandmail.com
  • Keywords: ETF Innovation, Active Management, Leveraged Funds, Gold Exposure

Canada’s ETF market is seeing new products from Manulife, LongPoint, and BMO. These include active strategies, leveraged plays, and gold income funds tailored for investors.

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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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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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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

  • Innovation in ETFs: Canada’s ETF market is experiencing rapid evolution with new product launches from major issuers like Manulife, LongPoint, and BMO. These funds cater to diverse investor strategies, including active management, leveraged exposure, and gold-based income generation.

Manulife’s Active ETF Series

  • Four New ETFs: Introduced low-cost, intraday-traded funds targeting fixed income and equity strategies.
    • Bond Fund: Blends government and corporate bonds across credit tiers for optimized returns in a rate-sensitive environment.
    • Equity Funds:
      • Global dividend growers with strong business models.
      • Canadian-focused dividend payers.
      • Monthly income from a mix of Canadian, U.S., and global dividends.

LongPoint’s Leveraged ETFs

  • Triple-Leveraged ETFs: Canada’s first 3x leveraged and inverse ETFs traded in CAD, targeting major indices and sectors:
    • Canadian banks (BNKU)
    • Canadian gold miners (CGMU)
    • Long-duration U.S. Treasuries (TLTU)
  • Single-Stock ETFs: Filed for 2x leveraged ETFs tracking U.S. tech stocks (Coinbase and MicroStrategy), with a 1.55% management fee.

BMO’s Diversified ETF Suite

  • Strategist-Led ETFs: Actively managed funds reflecting BMO’s investment themes, offering diversified exposure to Canadian and U.S. markets.
    • Includes hedged and unhedged units for currency risk management.
  • Gold Income ETF: Launched ZWGD, providing long-term gold bullion exposure and income via covered call spreads, targeting diversification and inflation protection.

Competitive Dynamics and Strategic Considerations

  • Innovation in Product Offerings: Issuers are responding to investor demand for tailored, outcome-driven products.
  • Leveraged ETFs: High-risk, high-reward options for traders seeking amplified exposure to volatile markets.
  • Gold and Income Strategies: Growing interest in gold as a hedge against inflation, with innovative income-generating structures.

Market Implications

  • Increased Competition: New ETFs intensify competition among issuers, potentially driving fee reductions and product differentiation.
  • Investor Choice: Enhanced options for investors seeking active management, leverage, or alternative income strategies.
  • Regulatory Considerations: Potential scrutiny of leveraged ETFs due to their high-risk nature and suitability for retail investors.

Long-Term Effects

  • Market Saturation: The rapid launch of new ETFs may lead to market saturation, requiring issuers to focus on niche strategies for differentiation.
  • Investor Education: The complexity of leveraged and inverse ETFs necessitates greater investor education to avoid misuse.

Conclusion

Canada’s ETF market is undergoing a transformation with innovative product launches that cater to diverse investor needs. While these developments offer enhanced opportunities, they also raise considerations around market competition, regulatory oversight, and investor suitability.