BMO 2015 ETF Outlook Report

Opportunities and Challenges for the ETF Industry

TORONTO, ONTARIO--(Marketwired - Jan. 23, 2015) - BMO Global Asset Management (BMO GAM) today released its bi-annual BMO 2015 ETF Outlook Report, which examines growth opportunities for Exchange Traded Funds (ETFs) and the industry's challenges for 2015.

According to the report, the Canadian ETF industry experienced significant growth in 2014, with more than C$10.3 billion in inflows - double the flows seen in 2013. Equity ETFs alone experienced C$5.8 billion in inflows in 2014 and fixed income ETFs had impressive inflows of more than C$4.3 billion. The report noted that this is because of the efficiency and liquidity benefits of offering fixed income on an exchange, bundling bonds in a basket instead of holding individual positions.

At the end of 2014, the Canadian ETF industry's assets under management (AUM) stood at C$76.8 billion, up 21.7 per cent over year-end 2013. There are now 360 ETFs listed in Canada, compared to just over 100 ETFs five years ago. The U.S. ETF market achieved a significant milestone last year, with just over US$2 trillion in AUM at year-end - 17.8 per cent higher than the previous year. More generally, the global ETF industry reached a record AUM of US$2.7 trillion invested in over 5,000 ETFs across 49 countries.

"2014 was another strong year, not only for the global ETF industry but domestically as well, with significant asset growth and an expanding user base," said Rajiv Silgardo, Co-CEO, BMO Global Asset Management. "It's clear that a growing number of investors understand the value that ETFs can bring to a portfolio, including transparency, increased liquidity, trading efficiency and access to markets."

According to Bloomberg data, BMO's ETF business led the Canadian ETF industry in new assets for the fourth year in a row. As at October 31, 2014, its AUM stood at C$17.8 billion with 24.3 per cent share of the market. In 2014, BMO S&P 500 Index ETF (Ticker: ZSP) experienced the largest equity inflows, signifying investors are looking to capitalize on the strong U.S. market. Two credit products, BMO High Yield Bond US Corporate Bond Hedged to CAD Index ETF (Ticker: ZHY) and BMO Short-Term US IG Corporate Bond Hedged to CAD Index ETF (Ticker: ZSU), had the largest fixed income inflows last year.