U.S. financial giants dominate Canada’s ETF business, but homegrown alternatives are easy to find.
The obvious place to start is Bank of Montreal’s hugely successful exchange-traded fund lineup. But other big banks have their own ETF businesses, as does Quebec’s Desjardins Group. More made-in-Canada ETFs can be found from companies like Mackenzie Investments and Purpose Investments.
Stripping U.S. securities out of your portfolio is a suspect strategy for pushing back against U.S. trade policy targeting Canada. You deprive yourself of exposure to the world’s dominant stock market, which in turn could mean lower performance for your portfolio. In theory, you could retire decades from now with less money because of an investing decision made in early 2025. Also, the stock market is anonymous. There is no record of your protest when you sell a U.S. stock or an ETF holding U.S. shares.
Using ETFs from Canadian as opposed to U.S. companies is a more practical way for an investor to support Canada at the expense of the U.S. Fortunately, it’s easy. In all the major asset classes, there are Canadian ETF providers with competitive products.
The top Canadian ETF company is BMO ETFs, with $121.4-billion in assets as of Jan. 31, according to National Bank Financial’s ETF team. This ranks BMO second behind the $147-billion held by RBC iShares, an alliance of RBC Global Asset Management and New York-based BlackRock Inc. BlackRock manages most of the ETFs in the group.
Other Canadian ETF groups in the Top 10 by assets include TD Asset Management, Mackenzie, National Bank and Purpose. All of these players offer both portfolio essentials, and more specialized funds as well. Purpose launched the world’s first bitcoin and ether ETFs.
ETFs from U.S. companies are often the largest and most liquid names in various asset classes, which is an important factor if you trade frequently. But on costs, ETFs from Canadian providers can be among the cheapest options.
The Mackenzie Canadian Equity Index ETF (QCN-T) has a management expense ratio of 0.04 per cent, compared with 0.05 per cent for the similar Vanguard FTSE Canada All Cap Index ETF (VCN-T) and 0.06 per cent for the iShares Core S&P/TSX Capped Composite Index ETF (XIC-T).
U.S.-based Vanguard is the third-ranked ETF company by assets at $79.4-billion. Other U.S. players with a significant footprint in the Canadian ETF business are Fidelity and Invesco. Fourth-ranked Global X is owned by a South Korean financial services company, while the parent company of fifth-ranked CI Global Asset Management is the target of a buyout offer from a company based in Abu Dhabi.