BMO Mid-Year ETF Report: Trends to Watch - Inflation, Innovation and ESG

• Flows reached $30 billion over the first half of the year, breaking the six-month inflow record set last year ⁽¹⁾

TORONTO, Aug. 3, 2021 /CNW/ - BMO Global Asset Management (BMO GAM) today released its mid-year Exchange Traded Funds (ETF) report, highlighting the continued popularity and record-setting growth of ETFs in Canada. The report features insights from experts from across BMO GAM's ETF team on the Canadian ETF market and key themes for the balance of the year including inflation risk, innovation and ESG.

"The market seems to be moving faster than ever, pivoting with each trending headline: vaccine news, political shifts, company earnings," said Mark Raes, Head of Product, BMO Global Asset Management Canada. "Agility is key in this environment and more investors than ever are seeing how ETFs can play an important role in their portfolio strategy. ETFs continue to maintain their popularity as portfolio staples, as proven by another six-month inflow record and continued trading liquidity."

Key Themes

Inflation: Alfred Lee (Portfolio Manager)

• Inflation will likely be monitored by central banks and investors as the economic reopening continues
• ETFs with exposure to certain sectors, such as Industrials and Materials, as well as U.S. Treasury Inflation Protected Securities (TIPS), can offer investors a hedge against inflation

Growth and Innovation: Danielle Neziol (Senior Product Manager)

• In the short term, higher treasury yields, coupled with a strong vaccination rollout, have supported a rotation out of growth stocks and into value stocks
• Long term, innovation remains a pillar of the growth equation; companies in this space are part of exponential growth markets that will continue to influence our behaviours and routines, and will power equity markets in the future

Environmental, Social and Governance (ESG): Erin Allen (Senior Product Manager)

• Growing investor interest in ESG is driven by multiple factors, including growing millennial investor participation, improved ESG data availability and value-based preferences. Additionally, investors are more aware of the impact ESG risks can have on a company's value and reputation
• BMO MSCI USA ESG Leaders Index ETF (ESGY/ESGY.F) became the largest ESG ETF listed in Canada with a combined AUM of $1.69 billion

Financial Sector: Chris McHaney (Portfolio Manager)

• Canadian banks have rebounded strongly since November and exceeded earnings expectations in the first half of the 2021 fiscal year
• Financial sector ETFs took in $648 million in June alone – approximately 60 per cent ($391 million) went into the BMO Equal Weight Banks Index ETF (ZEB) ⁽¹⁾

Dividend and Value: Chris Heakes (Portfolio Manager)

• Vaccination rollout, and the subsequent economic reopening, has led to a factor rotation out of quality companies and into cyclical dividend and value companies ⁽¹⁾
• Investors used ETFs to add strategic portfolio positions to capitalize on this market rotation: dividend ETFs saw $1.5 billion in net new flows in the first half of 2021

To view the full report, please click here.

For more information on BMO ETFs, visit: www.bmo.com/etfs.

⁽¹⁾ National Bank, ETF Report, June 30, 2021

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About BMO Exchange Traded Funds (ETFs)
BMO Exchange Traded Funds has been a leading ETF provider in Canada for more than 11 years, with over 100 strategies, over 25 per cent market share in Canada¹, and $80.6 billion in assets under management. 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 active mutual funds.

¹Morningstar, May 2021

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 $950 billion as of April 30, 2021, 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 Contacts: Colleen Hamilton, Toronto, [email protected], [phone]