Canada’s ETF Scene Heats Up: Active, Leveraged, and Gold Strategies Make Waves

Canada’s ETF Scene Heats Up: Active, Leveraged, and Gold Strategies Make Waves

  • 03.06.2025 10:03
  • theglobeandmail.com
  • Keywords: ETF Innovation, Active Management, Leveraged Funds, Gold Exposure

Canada's ETF market is innovating with new products from Manulife, LongPoint, and BMO. Manulife offers active income and equity funds; LongPoint launched triple-leveraged ETFs; BMO introduced strategist-led funds and a gold income strategy.

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Estimated market influence

Manulife Investment Management

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rolled out four new ETF series targeting fixed income and equity with active management focus on income and quality growth

LongPoint Asset Management

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launched Canada’s first locally listed 3X leveraged and inverse ETFs, offering amplified exposure to major indices and sectors

BMO Asset Management

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introduced a new suite of actively managed ETFs shaped by the insights of Brian Belski, Chief Investment Strategist at BMO Capital Markets

Context

Analysis of Canada’s ETF Market Developments

Overview

Canada’s ETF market is experiencing significant innovation, with major players introducing specialized products to meet investor demand for tailored solutions. The launches by Manulife, LongPoint, and BMO highlight trends toward active management, leveraged strategies, and alternative asset exposure.

Manulife’s Active ETF Series

  • Four new ETF series targeting fixed income and equity strategies.
    • A bond-focused ETF combining government and corporate bonds across credit tiers for optimized returns.
    • Equity funds:
      • Global Dividend Growers ETF targeting dividend-paying stocks with strong business models.
      • Canadian Dividend Growth ETF focusing on Canadian companies.
      • Global Monthly Income ETF offering monthly income from a mix of Canadian, U.S., and global dividend payers.
  • Focus: Income-focused portfolios with active management.

LongPoint’s Leveraged ETFs

  • First triple-leveraged ETFs in Canada:
    • 3X leveraged and inverse ETFs traded in Canadian dollars.
      • BNKU: 3X leveraged exposure to Canadian banks.
      • CGMU: 3X leveraged exposure to Canadian gold miners.
      • TLTU: 3X leveraged exposure to long-duration U.S. Treasuries.
      • Inverse counterparts for short positions.
  • Proposed single-stock ETFs:
    • COIU CN: 2X leveraged exposure to Coinbase stock.
    • MSTU CN: 2X leveraged exposure to MicroStrategy stock.
    • Management fee: 1.55%.
  • Target Audience: Traders seeking amplified exposure to high-volatility U.S. tech stocks.

BMO’s Actively Managed ETFs

  • Brian Belski-led strategy: Reflects broader investment themes with diversified equity and fixed income exposure.
    • New launches include:
      • BMO Diversified Equity ETF for balanced exposure.
      • BMO U.S.-Focused ETFs with hedged and unhedged units for currency risk management.
  • Gold Income Strategy:
    • ZWGD ETF provides exposure to long-term gold bullion holdings while generating income through a covered call spread.
    • Designed for diversification and inflation protection.

Market Implications

  • Increased Competition: The launches by Manulife, LongPoint, and BMO intensify competition in the Canadian ETF space.
  • Innovation in Product Design: The introduction of leveraged, inverse, and single-stock ETFs reflects investor demand for higher returns and tailored risk profiles.
  • Shift Toward Active Management: Manulife’s active ETFs and BMO’s strategist-led funds indicate a move away from passive indexing.
  • Gold and Alternative Assets: Growing interest in gold as a hedge against inflation, as seen with BMO’s ZWGD ETF.
  • Regulatory Considerations: The rise of leveraged and inverse ETFs may attract regulatory scrutiny due to their risk profiles.

Strategic Considerations

  • Investor Demand: Tailored, outcome-driven products are gaining traction as investors seek more sophisticated tools.
  • Cost Efficiency: Low-cost ETFs, such as Manulife’s offerings, are appealing in a rate-sensitive environment.
  • Leveraged Products: High-risk, high-reward options like LongPoint’s ETFs cater to speculative traders.
  • Global and Domestic Focus: BMO’s U.S.-tilted ETFs reflect investor interest in cross-border opportunities.

Long-Term Effects

  • Diversification of ETF Offerings: The market is becoming more fragmented, with a wider range of products catering to different investor needs.
  • Potential for Market Volatility: Leveraged ETFs may contribute to increased market volatility, particularly in high-growth sectors.
  • Regulatory Impact: Future regulatory developments could influence the availability and structure of leveraged ETFs.

This analysis underscores the dynamic evolution of Canada’s ETF market, driven by innovation and investor demand for specialized solutions.