BMO Annual ETF Outlook Report: Record Year for Global ETF Industry Amid Pandemic Volatility

• Canadian ETF industry assets up 20 per cent from 2019
• Innovation and responsible investing trends expected to continue growing

TORONTO, Feb. 2, 2021 /CNW/ - BMO Global Asset Management (BMO GAM) today issued its annual ETF Outlook Report, reporting on the exchange traded fund (ETF) industry and key trends for 2021.

Assets in ETFs grew globally in 2020 as investors recognized the benefits of using ETFs amid times of heightened volatility. At the end of December 2020, the global ETF industry had 7,602 ETFs from 485 providers on 73 exchanges in 60 countries, and assets of US$7.7 trillion⁽¹⁾.

The Canadian ETF industry reported another year of record numbers with C$257 billion in assets and C$41 billion in net new flows ⁽²⁾. The top 20 selling ETFs accounted for 40 per cent of the total flows. BMO ETFs led the industry with net new flows of C$8.4 billion and 22 tickers reporting inflows greater than C$100 million ⁽³⁾.

"As the pandemic brought the global economy to a standstill, ETFs displayed resiliency and provided investors with the liquidity to rebalance portfolios," said Mark Raes, Head of Product, BMO Global Asset Management Canada. "We expect the momentum of 2020 to continue to push ETF providers to differentiate themselves and partner with investors by developing products that build on emerging trends." 

Trends for 2021

Megatrends: This take on thematic investing seeks to identify future drivers of market growth driven by the adoption of new economy technologies and disruptive innovations. BMO GAM recently launched a suite of innovation ETFs that provide Canadian investors exposure to emerging themes.

Responsible Investing: Environmental, Social, and Governance (ESG) investing was a leading theme in 2020, and further growth in thematic ESG exposures such as clean energy is expected in 2021. 

Rotation in Factor Based ETFs: Amid the extreme market volatility of 2020, there was a rotation in factor performance with defensive portfolios trailing the market and quality factor ETFs maintaining positive returns and enduring downturns better than the market. 

Fixed Income: Rapidly changing markets in 2020 demonstrated the benefits of fixed income ETFs, as they provided investors the liquidity needed to quickly rotate into and out of different exposures. Fixed income ETFs continued to trade when many of the underlying bonds did not during the worst of the correction in March.

Inflation: Investors are looking for ways to add inflation hedges to portfolios heading into 2021, as inflation remains a concern given economic and monetary stimulus in 2020.

The global ETF industry is projected to double to more than US$16 trillion over the next five years, and the Canadian industry is expected to grow beyond C$600 billion by 2026. The ETF industry is well positioned to support portfolios, either through broad market exposures or more precise market segments.

"The opportunity for growth in the ETF industry remains significant as the efficiency, low cost, and tradability of these products continue to bring in new investors," said Mr. Raes. "It's important to work with a provider that delivers the support, education, and partnership required to succeed in this changing environment."

To view the full report, please click here. For more information on BMO ETFs, visit: www.bmo.com/etfs.

⁽¹⁾ ETFGI Industry Insights Report, December 31, 2020

⁽²⁾ National Bank, January 5, 2021

⁽³⁾ BMO Global Asset Management, December 31, 2020

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Certain statements included in this news release constitute forward-looking statements, including, but not limited to, those identified by the expressions "expect", "intend", "will" and similar expressions to the extent they relate to the Fund, the Manager and/or the Advisor. The forward-looking statements are not historical facts but reflect the Fund's, the Manager's, and/or the Advisor's current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Although the Fund, the Manager, and/or the Advisor believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. The Fund, the Manager and/or the Advisor undertakes no obligation to update publicly or otherwise revise any forward-looking statement or information whether as a result of new information, future events or other such factors which affect this information, except as required by law. 

About BMO Exchange Traded Funds (ETFs)
BMO Exchange Traded Funds has been a leading ETF provider in Canada for 11 years, with over 100 strategies and approximately 30 per cent market share in Canada. BMO ETFs are designed to stay ahead of market trends and provide compelling solutions to help advisors and investors. This includes a comprehensive suite of ETFs developed in Canada for Canadians, such as cost effective core equity ETFs following market leading indexes, and a broad range of fixed income ETFs; solution-based ETFs responding to client demand; and innovation with smart beta ETFs, as well as combining active and passive investing with ETF series of award-winning active mutual funds.

About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider - the 8th largest bank, by assets, in North America. With total assets of $949 billion as of October 31, 2020, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.

SOURCE BMO Financial Group

Media Contact: Colleen Hamilton, Toronto, [email protected], [phone]