ETF ownership could increase significantly in the years ahead, study finds

Investors in ETFs appreciate the product’s low management fees and transaction costs as well as the diversification and risk reduction they offer within their portfolios

By: Tessie Sanci
November 24, 2016 October 17, 2019
12:20

Although 31% of Canadian investors currently own ETFs, that figure could surge as many Canadians expect to incorporate the products into their portfolios in the near future, according to new research from Toronto-based BlackRock Asset Management Canada Ltd.

In fact, 38% investors in Canada who don’t already possess ETFs are interested in purchasing the products within the next 12 months while 62% say they expect to purchase ETFs within the next three years. Of those who already own ETFs, 93% plan on increasing their share in these products within the next year, states BlackRock Canada’s ETF Pulse Survey released on Thursday.

ETFs provide investors with a range of investment strategies in a product that is cost-effective, transparent and easy to use, which is resonating with investors, according to Warren Collier, head of iShares, BlackRock Canada’s ETF arm.

“Supported by record growth, it’s encouraging to see that ETFs are coming into their own in Canada, and we believe [they are] well positioned to continue their momentum into 2017,” says Collier in a statement.

For investors who own ETFs, the report suggests that the products make up a sizable proportion of their portfolios. The average ETF owner’s portfolio consists of 20% in ETFs, 24% in individual stocks and 22% in mutual funds.

The survey found that many investors are turning to ETFs to replace certain investment products in their portfolios, with 45% saying the products are taking the place of individual stocks and 41% saying this is the case for mutual funds.

ETF owners cite three key advantages to possessing ETFs: 51% say they appreciate the low management fees; 34% like the low transaction costs to buy and sell these particular products; and 34% say ETFs are a good way to diversify and reduce risk within their portfolios.

The data for this report come from more than 400 survey participants between the ages of 21 and 75 who are decision makers in their households; hold financial savings or investment accounts; have minimum investable assets of $100,000; and are aware of ETFs. Market Strategies International conducted the online survey for BlackRock Canada.

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