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 07:12
  • 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. These include active income funds, leveraged ETFs, and gold strategies offering investors tailored solutions.

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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 a wave of innovation, with major players introducing specialized products to meet investor demand for tailored solutions. This shift reflects broader trends in the financial industry, emphasizing active management, leveraged strategies, and alternative asset exposure.

Manulife’s Active ETF Series

  • Key Launch: Manulife rolled out four new ETFs, repackaging mutual fund strategies into low-cost, intraday-traded vehicles.
  • Focus Areas:
    • Fixed income: A bond fund blending government and corporate bonds across credit tiers.
    • Equity:
      • Globally diversified dividend growers (e.g., Fund A).
      • Canadian-focused dividend payers (e.g., Fund B).
      • Monthly income from a mix of Canadian, U.S., and global dividends (e.g., Fund C).
  • Market Impact: These funds provide advisors with new tools to build resilient, income-focused portfolios.

LongPoint’s Leveraged ETFs

  • Triple-Leveraged ETFs: Launched Canada’s first 3X leveraged and inverse ETFs, including:
    • Canadian banks (BNKU).
    • Canadian gold miners (CGMU).
    • Long-duration U.S. Treasuries (TLTU).
  • Inverse ETFs: Include -3X counterparts for bearish market bets.
  • Proposed Single-Stock ETFs: Files for 2x leveraged ETFs tracking:
    • Coinbase (COIU CN).
    • MicroStrategy (MSTU CN).
  • Fees: Management fee of 1.55%.
  • Target Audience: Traders seeking amplified exposure to high-volatility U.S. tech stocks.

BMO’s Strategist-Led ETFs

  • Brian Belski’s Themes: New suite of actively managed ETFs reflecting BMO’s investment themes, including:
    • Diversified equity and fixed income (e.g., Fund X).
    • U.S.-focused options with hedged units (e.g., Fund Y, Fund Z).
  • Gold Income Strategy: Launch of ZWGD, the BMO Gold Bullion Covered Call ETF.
    • Provides exposure to long-term gold bullion.
    • Generates income through a covered call spread.
    • Aims to cushion downside moves in gold while enhancing yield.

Market Trends and Implications

  • Innovation in Product Offerings: ETF issuers are responding to investor demand for tailored, outcome-driven products.
  • Leveraged Strategies: High-risk, high-reward options are gaining traction among speculative traders.
  • Gold and Alternative Assets: Interest in gold as a hedge against inflation continues to grow, with innovative structures like covered call ETFs.
  • Competition: The launches by Manulife, LongPoint, and BMO highlight increased competition in the Canadian ETF space.
  • Regulatory Considerations: Potential scrutiny of leveraged ETFs, given their risks and complexity.

Competitive Dynamics

  • Manulife: Focuses on low-cost, active management for income-focused investors.
  • LongPoint: Pioneers leveraged ETFs in Canada, targeting speculative traders.
  • BMO: Leverages its investment research and expertise to offer diversified, strategy-driven ETFs.

Long-Term Effects

  • Product Diversification: The market is seeing a broader range of ETFs catering to different investor needs.
  • Investor Education: The rise of complex products like leveraged ETFs may require increased investor education.
  • Market Impact: These new offerings could drive further innovation and competition in the ETF space.

Conclusion

Canada’s ETF market is evolving rapidly, with issuers introducing innovative products to capture investor demand. While these developments present opportunities for investors seeking tailored solutions, they also highlight the need for careful consideration of risks and market conditions.