While ETF inflows reached new highs across major asset classes, it's the volume of new products that really stands out.Ratana21/iStockPhoto / Getty Images
Canada’s investment industry gathered at the Toronto Stock Exchange last March to mark the 35th anniversary of a novel investment product that offered the average investor low-cost exposure to the Canadian equities market.
On March 9, 1990, the Toronto 35 Index Participation Fund, known as TIPs, became the world’s first successful exchange-traded fund (ETF).
The innovators behind the product likely didn’t imagine that, three-and-a-half decades later, ETFs would bring in more than $125-billion in Canada in a single year (and more than US$1.5-trillion south of the border).
The types of ETFs rolling out would probably be even more surprising.
As Daina Lawrence reported this week, there were various records set for ETFs in 2025. But even as inflows reached new highs across major asset classes, the volume of new products – 364 – is what stands out. Especially as the largest batch were single-stock ETFs that use leverage and covered calls, an innovation that could hardly be further from the ETF’s original purpose of simplifying investing by replicating the market in a single product.
As National Bank Capital Markets’ Linda Ma noted, the composition of ETF investors is undergoing a significant shift. ETF assets held by do-it-yourself investors have surpassed those in the advisor channel. It’s not surprising, then, that manufacturers are focusing on the DIY market as they file new prospectuses.
But complexity isn’t necessarily winning. While self-directed investors invested disproportionately in strategies such as options-based ETFs, passive equity ETFs remained the most popular investments, according to TD Securities Inc.’s 2025 year-end report.
And a slightly older ETF innovation from the past decade is quietly dominating. Asset allocation ETFs brought in almost $23-billion last year, showing that many investors are still attracted to the simplest form of portfolio construction. The top five funds in terms of inflows were all asset allocation or broad index ETFs.
Where does this leave advisors? With more choice, to be sure: 1,792 ETFs and counting. Most of those will never get a look for clients’ portfolios, but that doesn’t mean the clients aren’t looking themselves.
With more advised clients now investing on their own as well, there’s more of an onus on advisors to know and understand what’s out there and to educate clients about products they would never recommend.
Now that an ETF can be a wrapper for just about anything, advisors can help explain what does and doesn’t fit with a client’s long-term goals.
With manufacturers less focused on the advisor market, how are advisors using ETFs? Which products remain pillars of client portfolios? Let us know.
- Mark Burgess, Globe Advisor assistant editor
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