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 21:22
  • theglobeandmail.com
  • Keywords: ETF Innovation, Active Management, Leveraged Funds, Gold Exposure

Canada’s ETF market is heating up with new strategies from Manulife, LongPoint, and BMO. Manulife offers active income funds, LongPoint launched triple-leveraged ETFs, and BMO introduced a gold income strategy.

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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

Canada’s ETF market is experiencing significant innovation, with major players introducing specialized products to meet investor demand for tailored strategies. This shift reflects broader trends in active management, leveraged investing, and alternative asset exposure.

Manulife’s Active ETF Series

  • Products: Four new ETF series launched, targeting fixed income and equity strategies.
    • MFCI: Blends government and corporate bonds across credit tiers for optimized returns in a rate-sensitive environment.
    • MFCA: Globally diversified equity fund focusing on dividend growers with strong business models.
    • MFGO: Canadian-focused dividend growth strategy.
    • MFGU: Monthly income ETF combining Canadian, U.S., and global dividend payers.
  • Key Features:
    • Low-cost, intraday-traded vehicles.
    • Repackages mutual fund strategies into ETFs.
  • Market Impact: Provides advisors and investors with new tools for constructing resilient, income-focused portfolios.

LongPoint’s Leveraged ETFs

  • Products: Canada’s first 3X leveraged and inverse ETFs, traded in Canadian dollars.
    • BNKU: 3X leveraged exposure to Canadian banks.
    • CGMU: 3X leveraged exposure to Canadian gold miners.
    • TLTU: 3X leveraged exposure to long-duration U.S. Treasuries.
  • Inverse ETFs:
    • Offer -3X inverse exposure to the same indices and sectors.
  • Future Launch:
    • Filed for 2x leveraged single-stock ETFs, including COIU CN (Coinbase) and MSTU CN (MicroStrategy).
  • Fees: 1.55% management fee.
  • Market Impact:
    • Sets a new benchmark for leveraged ETF innovation in Canada, catering to high-risk tolerance traders.

BMO’s Strategist-Led ETFs

  • Products: Actively managed ETFs developed with insights from Brian Belski, BMO’s Chief Investment Strategist.
    • BMO Multi-Asset Income ETF (MAIO): Balances equities and fixed income.
    • BMO Canadian Balanced ETF (ZWB) and BMO U.S. Equity ETF (ZUS): Offer diversified equity exposure with hedged and unhedged units.
  • Gold Income Strategy:
    • ZWGD: Provides exposure to long-term gold bullion with income generation through covered call spreads.
  • Market Impact:
    • Enhances BMO’s position as a leader in actively managed ETFs, offering investors flexibility and strategic positioning.

Market Trends and Implications

  • Increased Competition: The launches by Manulife, LongPoint, and BMO highlight a competitive landscape driven by investor demand for specialized products.
  • Leveraged ETF Growth: The introduction of leveraged and inverse ETFs underscores the growing appetite for high-risk, high-reward strategies.
  • Gold as a Strategic Asset: The focus on gold ETFs reflects investor interest in inflation protection and portfolio diversification.
  • Regulatory Considerations:
    • The rise of leveraged ETFs may attract regulatory scrutiny due to their potential risks for retail investors.
  • Long-Term Effects:
    • The trend toward active management and specialized ETFs is likely to continue, driving further innovation in the Canadian market.

Competitive Dynamics

  • Manulife: Strengthens its position in active management with a focus on income strategies.
  • LongPoint: Pioneers leveraged ETFs in Canada, targeting retail and institutional traders.
  • BMO: Reinforces its leadership in actively managed ETFs with a diversified product suite.

Strategic Considerations

  • Investor Demand: The shift toward tailored, outcome-driven products reflects evolving investor preferences for customization and performance.
  • Cost Efficiency: The low-cost structure of ETFs continues to appeal, with fees ranging from 0.20% (Manulife) to 1.55% (LongPoint).
  • Risk Management: Products like the gold income ETF (ZWGD) offer investors a way to hedge against market volatility.

Conclusion

The launches by Manulife, LongPoint, and BMO signal a maturation of Canada’s ETF market, with issuers responding to investor demand for innovation and specialization. The competitive dynamics suggest that the Canadian ETF landscape will continue to evolve, offering investors a broader range of tools for achieving their financial goals.