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 23:11
  • 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 income strategies, leveraged ETFs targeting sectors like banks and gold miners, and a first-of-its-kind single-stock leveraged ETFs.

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Estimated market influence

Manulife Investment Management

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Analyst rating: N/A

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 a wave of innovation, with major players introducing specialized products to meet investor demand for tailored solutions. This trend highlights the growing sophistication of Canadian investors and the competitive dynamics driving ETF issuers to innovate.

Manulife Investment Management

  • New Offerings: Introduced four new ETF series targeting fixed income and equity strategies.

    • A bond-focused ETF blending government and corporate bonds across credit tiers for optimized returns in a rate-sensitive environment.
    • Equity funds:
      • Globally diversified dividend growers with strong business models.
      • Canadian-focused dividend growth strategies.
      • Monthly income ETF combining Canadian, U.S., and global dividends.

  • Key Features:

    • Low-cost, intraday-traded vehicles.
    • Active management with a focus on income and quality growth.

  • Market Impact:

    • Provides new tools for advisors to build resilient, income-focused portfolios.
    • Reflects a shift toward active management in the ETF space.

LongPoint Asset Management

  • Leveraged ETFs:

    • Launched Canada’s first triple-leveraged (3X) and inverse ETFs, traded in Canadian dollars.
    • Products include:
      • 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 counterparts offering -3X exposure.

  • Proposed Single-Stock ETFs:

    • Filed for 2x leveraged single-stock ETFs tracking U.S. tech names.
      • COIU CN: 2x daily performance of Coinbase stock.
      • MSTU CN: 2x daily performance of MicroStrategy.

  • Fees:

    • Management fee of 1.55% for the proposed single-stock ETFs.

  • Market Impact:

    • Sets a new benchmark for leveraged ETF innovation in Canada.
    • Appeals to high-risk tolerance traders seeking amplified exposure to volatile U.S. tech stocks.

BMO Asset Management

  • Strategist-Led ETFs:

    • Introduced a suite of actively managed ETFs led by Brian Belski, Chief Investment Strategist.
    • Products include:
      • BMO Global Diversified ETF: Balances equities and fixed income.
      • U.S.-focused ETFs with hedged and unhedged units for currency risk management.

  • Gold Income Strategy:

    • Launched ZWGD, the BMO Gold Bullion Covered Call ETF.
      • Provides exposure to long-term gold bullion holdings.
      • Generates income through a covered call spread.
      • Designed to enhance yield and cushion downside gold price volatility.

  • Market Impact:

    • Strengthens BMO’s position in the strategic ETF space.
    • Addresses investor demand for gold as a hedge against inflation and market volatility.

Market Trends and Implications

  • Innovation in ETF Product Development: Issuers are responding to investor demand for specialized, outcome-driven products.
  • Competition and Differentiation:
    • Manulife focuses on active management and income strategies.
    • LongPoint targets leveraged and single-stock exposure, a first in Canada.
    • BMO emphasizes strategic equity allocation and gold income solutions.
  • Long-Term Effects:
    • Likely to drive further innovation in ETF product design.
    • May increase competition, potentially lowering costs for investors.
  • Regulatory Considerations:
    • The rise of leveraged ETFs may attract regulatory scrutiny due to their riskier nature.
    • Gold and income-focused ETFs could see sustained demand amid inflation concerns.

Conclusion

Canada’s ETF market is evolving rapidly, with issuers offering increasingly sophisticated products to cater to diverse investor needs. The launches by Manulife, LongPoint, and BMO underscore the growing complexity and competition in the ETF space, with implications for both short-term market dynamics and long-term investment strategies.