ETF News

If the first Exchange Traded Fund (ETF) started trading in the U.S. in 1989, Canada followed suit in 1990 with the first Canadian ETF, the successful Toronto Index Participation Shares. Now ETFs are popular investment vehicles all around the globe. The Canadian market continues to be at the forefront of innovation, with over 1,200 ETFs listed and over CAD$330 billion assets invested. In this article, we give you a tour of the NEO ETF Screener, the hub of Canadian ETFs.

Types of ETFs available in Canada

ETFs are often framed as being the offspring of stocks and index funds’ marriage. ETFs inherited traits from each parent. Like index funds, most ETFs are passively managed, diversified, and low cost. Similar to stocks, they trade through a brokerage account on exchanges at any time during the day. This mash-up of desirable traits made ETFs popular investment vehicles.  

What is the NEO ETF Screener?

An ETF screener is a platform, web-based or desktop-based, that helps its userbase find ETFs. Thus, the investment universe is narrowed down after users set certain criteria and filter out the data. 

The NEO ETF Screener provides users with access to the Canadian ETF universe. Investors can define their exposure per asset class, theme, geography, and sector. Moreover, they can apply different filters to the data. As a result, they can toggle between actively and passively managed ETFs, chose whether ETFs are denominated in CAD or USD, select ESG only ETFs, etc.

The NEO ETF Screener is the result of a partnership between NEO and Trackinsight SAS, with the latter providing the data, analysis, and editorial content on the NEO website.

NEO ETF Screener feature: Asset Classes 

The NEO ETF Screener divides the Canadian ETFs across different classes such as stocks, bonds, commodities, cryptocurrencies, and multi-asset. 

1. Equity ETFs (906): offer a wide array of ETFs to choose from and are the most common type in the market.
   - International ETFs: invest in stocks of companies headquartered outside Canada.
   - Sector ETFs: invest in stocks of companies working in a similar line of business and offering similar products or services.
   - Dividend ETFs: invest in stocks that have a history of paying dividends to shareholders.
   - Market-Cap index ETFs: invest, select, and weight stocks based on the size of the companies’ market cap.
2. Bond ETFs (359): comprise a basket of fixed income securities. They give investors exposure to bond market much easier than before. Like traditional bonds, bond ETFs provide investors interest and coupon payments.
3. Commodity ETFs (38): are an alternative to investing directly in physical commodities of futures. Commodities ETFs could be physically backed funds or derivatives-based funds.
4. Cryptocurrencies ETFs (37): track the price of any digital and/or cryptocurrency. They provide investors with exposure and allow them to buy ETFs without trading the currencies themselves. Like Commodity ETFs, Crypto ETFs could be physically backed or derivatives based.
5. Multi-asset ETFs (56): spread investment capital over several asset classes such as equities, fixed income, commodities, cryptocurrencies, etc. This ensures that investors are not at the mercy of a single asset class’s adverse price movements.

NEO ETF Screener feature: Themes

Thematic ETFs are exchange-traded funds that track a market trend as opposed to a sector or an industry. They aim to isolate a niche market segment and narrow down the focus to a specific theme. These ETFs are a new way to buy slices of any exposure the investors want.

Trackinsight developed a proprietary Thematic Investing classification that is structured based on 3-tiers. This taxonomy facilitates ETF research using a transparent framework. The three-tiered methodology maps each ETF against 5 Megatrends, 12 Trends, and 68 Themes.

The NEO ETF Screener allows investors to define any exposure to one of 33 themes available in Canada.

NEO ETF Screener feature: Geography 

Investors looking for country-specific ETFs or broad-based global indices can define exposures according to geographic locations. The NEO ETF Screener accommodates 14 different geo exposures available for ETFs trading on the Canadian stock exchanges, most notably Canada, USA, and Developed Markets.

NEO ETF Screener feature: Sector

The funds can invest in thousands of stocks across industries or focus on a particular sector. Such features amplify the diversification benefits of adding ETFs to any given portfolio. By investing in ETFs, investors can generate income, speculate, and/or hedge against risks. The NEO ETF Screener identifies 16 different sectors with the most popular sectors including biotechnology, consumer discretionary, consumer staples, energy, financial services, and gold miners.  

The Canadian ETF Market in 2022 - Key Numbers

The NEO ETF Screener identifies 1,259 ETFs listed and trading in Canada, as of February 4th, 2022. These ETFs are backed by more than 42 sponsors. According to Trackinsight data, Canadian ETFs attracted a net of CAD$6 billion on a YTD basis. 

Total assets crossed the CAD$300 billion milestone and stand now at CAD$334 billion. ETFs are gaining popularity globally, and more specifically in Canada. Not only do ETFs provide diversification and make tax-efficient investment vehicles, but they also are cost-effective and easy to use.

RBC iShares, BMO Asset Management, Vanguard Canada, Horizon ETFs, and CI First Asset are the top five Canadian ETF providers. They constitute 81% of the total AUM in Canadian ETF space while managing CAD$96 billion, CAD$90 billion, CAD$48 billion, CAD$21 billion, and CAD$15 billion, respectively. Together, they succeeded in attracting 70% of inflows YTD (CAD$4.2 billion).

Top 10 ETFs by most inflows in 2022

1. iShares S&P/TSX 60 Index ETF (XIU): CAD$1.2 billion
2. BMO MSCI USA ESG Leaders Index ETF (ESGY): CAD$748 million
3. BMO S&P 500 Index ETF (ZSP): CAD$607 million
4. BMO MSCI EAFE Index ETF (ZEA): CAD$571 million
5. Mackenzie Canadian Equity Index ETF (QCN): CAD$466 million
6. BMO Short Corporate Bond Index ETF (ZCS): CAD$368 million
7. Vanguard S&P 500 Index ETF (VFV): CAD$365 million
8. Horizons Cash Maximizer ETF (HSAV): CAD$294 million
9. Horizons S&P 500 Index ETF (HXS): CAD$291 million
10. Horizons S&P/TSX 60 Index ETF (HXT): CAD$238 million