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

  • 03.06.2025 07:03
  • theglobeandmail.com
  • Keywords: ETF Innovation, Active Management, Leveraged Funds, Gold Exposure

Canada’s ETF market is seeing innovation with new products from Manulife, LongPoint, and BMO. Manulife offers active income and equity funds; LongPoint launched triple-leveraged ETFs; BMO introduced gold income strategies.

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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 solutions. This shift reflects broader trends toward active management, leveraged strategies, and alternative asset exposure.

Manulife Investment Management

  • New ETF Series: Launched four new ETFs targeting fixed income and equity strategies.
    • Fixed Income: A low-cost bond fund blending government and corporate bonds across credit tiers for optimized returns.
    • Equity Funds: Includes global and Canadian-focused dividend growth strategies, offering monthly income from diversified sources.
  • Key Features:
    • Low-cost and intraday tradable.
    • Focus on income generation and quality growth.
  • Market Impact:
    • Provides advisors with new tools for constructing resilient portfolios.
    • Competes with traditional mutual funds by offering flexibility and liquidity.

LongPoint Asset Management

  • Triple-Leveraged ETFs: Launched 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 counterparts available for short exposure.
  • Proposed Single-Stock ETFs:
    • COIU CN: Targets 2x daily performance of Coinbase stock.
    • MSTU CN: Targets 2x daily performance of MicroStrategy stock.
  • Key Features:
    • Management fee: 1.55%.
    • Designed for traders seeking amplified exposure to high-volatility U.S. tech stocks.
  • Market Impact:
    • Sets a new benchmark for leveraged ETF innovation in Canada.
    • Attracts speculative and short-term trading interest.

BMO Asset Management

  • Actively Managed ETFs:
    • Launched a suite of funds led by Brian Belski, Chief Investment Strategist.
    • Options include diversified equity and fixed income strategies with hedged and unhedged units for currency risk management.
  • Gold Income Strategy:
    • Introduced ZWGD, the BMO Gold Bullion Covered Call ETF.
    • Provides exposure to gold bullion with income generation through covered call spreads.
  • Key Features:
    • Targets inflation protection and portfolio diversification.
    • Unique approach to combining gold exposure with yield.
  • Market Impact:
    • Enhances BMO’s position in the alternatives space.
    • Appeals to investors seeking both growth and income.

Market Trends and Competitive Dynamics

  • Specialization: ETF issuers are focusing on niche strategies, such as active management, leverage, and alternative assets.
  • Increased Competition: New products from Manulife, LongPoint, and BMO intensify competition in the Canadian ETF market.
  • Investor Demand: The rise of outcome-driven, tailored solutions reflects investor preferences for flexibility and targeted exposure.
  • Regulatory Considerations: Launch of leveraged ETFs may attract regulatory scrutiny due to their speculative nature.

Long-Term Effects and Industry Implications

  • Product Innovation: The trend toward specialized ETFs is likely to continue, driving further innovation in fund structures.
  • Investor Education: The complexity of leveraged and inverse ETFs may require increased investor education to avoid misuse.
  • Market Expansion: The introduction of gold and single-stock ETFs could attract new investor segments, expanding the Canadian ETF market.
  • Global Alignment: Canada’s ETF innovation aligns with global trends, positioning the country as a competitive hub for financial product development.

Conclusion

The launches by Manulife, LongPoint, and BMO underscore the dynamic evolution of Canada’s ETF market. These products cater to diverse investor needs, from income generation to speculative trading, while reflecting broader trends toward innovation and specialization. The competitive landscape is heating up, with issuers leveraging unique strategies to capture market share.