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Index IDEA: Canadian advisors fixed on ETFs

A recent FTSE Russell survey of Canadian financial advisors indicates growing interest in exchange traded funds, or ETFs, for client portfolios while highlighting what they are looking for when selecting ETF products.

The 2018 FTSE Russell smart beta advisor survey expanded on the global index provider’s 2015 US advisor smart beta survey with input from 256 full-time, fee-based financial advisors and wealth managers divided almost equally between the US, UK and Canada. In addition to asking advisors about their awareness and use of smart beta index-based investment strategies, the FTSE Russell survey asked about ETF preference and usage:

  • Among the 81 Canadian financial advisors surveyed, 37% believe their ETF use will increase in the next 12 months. ETFs actually led the list followed by individual stocks (32%), active mutual funds (25%) and separately managed accounts (22%).
     
  • When selecting ETFs, Canadian financial advisors cite cost (44%), performance (38%) and diversification (37%) as the most important factors to consider.
     
  • When asked where they would like to see more ETF choices, Canadian financial advisors surveyed asked for international or global equity (31%), smart beta/factor-oriented (30%) and emerging markets, commodities and international fixed income (28%) above all other choices.
     
  • 52% of Canadian advisors see ETFs as the preferred vehicle for actively managed fixed income strategies, relative to 27% of US and 22% of UK financial advisors.
     
  • Canadian financial advisors use both ETFs and mutual funds for passively managed fixed income strategies, while UK advisors tend to favor mutual funds and US advisors favor ETFs.

Source: FTSE Russell - Smart beta: 2018 survey findings from US, Canadian and UK financial advisors.

Jacqueline O’Flanagan, Director, FTSE Russell Canada:

“Findings from our recent survey of Canadian financial advisors confirm a robust and growing market for index-based ETFs in Canada. The survey results also reinforce room for expansion in this market as Canadian advisors are looking for a more diverse selection of ETFs to help meet their clients’ needs for portfolio diversification.”

Get more information on ETFs based on indexes from FTSE Russell.

 

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