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War of the market share in exchange-traded funds

by

Alain Thériault

13 March, 2018 09:45

Alain Huard, and Alain Desbiens.

The growth of exchange traded funds (ETFS) in check. A fight took place between the two largest providers in Canada. BMO is in the process of joining BlackRock in terms of assets under management.

Exchange-traded funds have had a big month in October 2017, while their assets under management have surpassed the $ 140 billion dollars (G$), thanks to net sales of$ 2.8 billion. This sector of investment funds produced net sales of 21 G$ 1 January to 31 October 2017.

BlackRock toe-to-toe

Providers of index ETFS iShares, which dominates the market for almost 20 years in terms of assets under management, BlackRock is seriously hook for the first time. With its ETF, BMO smashes month after month of record sales. She approaches the first rank in terms of assets under management.

According to the report, the Canadian ETF Flows of National Bank Financial for the month of September, the iShares have suffered outflows of 1,151 G$, then that BMO has instead added 292 million ($M) in its assets. In October, BMO has received net sales of$ 790 Million, while BlackRock has had to settle for$ 16 Million of net sales at the end of this period.

The market shares of the iShares will decrease

This is clearly a fight to two. With 58,1 G$ of assets at 31 October, iShares has a market share of 41.1 %, while it was 41.9 % a month earlier. BMO had assets of 44.7 G$ in October, representing a market share of 31.6 %.

The Journal of insurance has also obtained an overview of market shares such that they amounted to the end of 2018. The trend is continuing. The share of BMO remains stable, while that of iShares decreases again somewhat.

A club to share

The first two form a club to share. Third player in the ranking for October, Vanguard has an asset of$ 13.6 billion, representing a market share of 9.3 %. In fifth place, with$ 4.6 billion in assets, RBC holds a market share of 3.2 %. He had known of the net sales of the highest of any sector, is 836 M$.

In sixth place is a well-known name in the independent distribution network : Invesco. Arrived in 2009, the same year as BMO, Invesco has seen the ETF BMO quickly take the lead on its PowerShares.

«A certain progress»

«We have seen some progress since 2009, but the offering of BMO is much more extensive in Canada (PowerShares is a trademark also present in the United States). In addition, we distribute our products only within the independent network. BMO is both in the network and in the banking network, » said Alain Huard, vice-president and regional sales director ofInvesco Canada.

BMO was one of the first five players of the sector ETF and it has been relatively early to print his mark in a different way, argues Alain Desbiens, vice-president of sales for the region of eastern canada , BMO global asset Management Canada. «Over the years, we have done multiple sessions of presentation (road show), and provided continuous training on the sector ETF to all councillors. «

A potential «huge» for ETFS in Canada

The bank has also created multiple tools, paper and digital, on the ETF. Alain Desbiens said also count on an experienced team who cover a wide. «Our 28 regional vice-presidents and seven specialists in ETF vulgarisent the offer of the ETFS, the portfolios of mutual funds and strategic and tactical ETFS and segregated funds. We are number one in sales of ETFS in Canada for more than 6 years. «

The potential for the sector ETFS in Canada is immense, both at retail and in the institutional market, he says. «More than 30 % of our sales are to institutional investors. We are looking to expand our service offering to the retail and institutional. The two markets have a huge potential. «

Future Expansion ensured

With 27 players in the squad at 31 October, Alain Desbiens recalls that the market for ETFS is still small compared to mutual funds. But its expansion is assured, » he said.

«The sector ETF has a rapid growth and increases of a more organic (number of players increase and consolidation among smaller players in the market). The growth of the sector ETFS should continue to be stronger and organic. According to our figures, only 3 % of canadian assets are invested in ETFS, while 35 % of canadian assets are invested in mutual funds, » said Mr. Desbiens.

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