What Canadian Investors Can Learn from ETF Marketing and Psychology

The financial industry operates in a world of intangibles. Unlike businesses that sell physical products or direct services, finance revolves around paper and electronic instruments that represent value rather than embody it. Yet, for all the differences between banks, fund managers, and manufacturers, they share one undeniable truth: human nature drives their success or failure. That influence is particularly evident in how financial products are marketed.

Financial institutions strive to project stability, caution, and professionalism. These are the hallmarks of investor trust. As a result, their marketing strategies tend to evolve slowly and stay within regulatory limits. Rather than reinventing the wheel, the financial sector often borrows ideas that have already worked in other industries. When you look closely, you can see striking parallels between the marketing of modern investment products—particularly exchange-traded funds (ETFs)—and the tactics used in industries as diverse as casinos and consumer goods.

A surprising connection exists between ETFs and gambling casinos. Casinos earn money by taking a small share of each bet placed, while ETF providers earn management fees as a percentage of invested assets. Both rely on steady participation and continual engagement from their customers.

Casinos are experts at keeping players interested. They create excitement and encourage more spending by introducing “side bets”—optional wagers that make the game feel more dynamic, even when the odds are lower. These bets don’t change who wins the main game but keep money flowing across the tables.

In a similar way, the ETF industry frequently releases new and specialized funds that appeal to investors’ curiosity or enthusiasm for niche themes. Each new ETF invites investors to “try something different,” whether that’s exposure to a specific industry, a geographic region, or a trendy investing idea. Just as side bets bring more wagers into play, new ETFs bring more assets under management, increasing fee revenue for fund sponsors.

This year alone, nearly 10% of all ETFs on the market have been shut down—188 funds in total. The reason is simple: insufficient public interest. The closures reveal how marketing momentum can sometimes outpace investor demand.

The proliferation of ETFs reflects human psychology as much as market needs. Investors, like gamblers, crave novelty and variety. The ability to make small, distinct bets within a larger portfolio provides both emotional satisfaction and a sense of participation. A thematic ETF focusing on clean energy, cybersecurity, or blockchain can feel like a ticket to the next big thing. Yet, the more specialized the fund, the higher the chance it may not perform as expected.
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Understanding this pattern helps investors recognize when enthusiasm—not evidence—is driving new product launches. In finance as in gambling, excitement can be costly when it clouds judgment.

The connection between ETFs and marketing innovation also calls to mind a famous mid-century business lesson. In 1952, Betty Crocker wanted to boost sales of its instant cake mix. The company’s researchers discovered that the all-in-one convenience of “just add water” left homemakers feeling guilty. It seemed too easy, too artificial, and not truly homemade.

Psychologists advised the company to remove the powdered eggs and ask consumers to add a fresh egg themselves. That small change created a sense of participation and authenticity. Sales soared once customers felt involved in the baking process.

Financial marketers use similar psychological triggers. Many ETFs allow investors to feel personally engaged in building a more customized or “authentic” portfolio. By choosing a fund that targets, for instance, renewable energy or Canadian dividend growers, investors can feel that their portfolio reflects their own insight or conviction. The product’s complexity becomes part of its appeal.

Each year brings a new wave of ETFs aimed at increasingly specific niches. Some of these funds genuinely meet investor needs; others simply chase attention. A good example is the KraneShares Emerging Markets Healthcare Index ETF, which offers exposure to healthcare companies operating in developing economies.

For investors with a belief in both global growth and the long-term potential of healthcare, this ETF provides a convenient way to act on that view without buying individual foreign stocks. It’s easy to imagine the marketing appeal—investors can say they hold “emerging market healthcare” without the complications of direct overseas investing.

But not every new ETF offers a sound long-term opportunity. Just as casinos continually add new side bets to draw players, ETF sponsors introduce fresh products to attract capital. Investors should remember that every new fund serves two audiences: those looking for exposure, and the firms collecting management fees.

ETFs can play a useful role in a balanced portfolio. They offer diversification, low cost, and easy access to many markets that were once difficult for individuals to reach. For Canadian investors, they can simplify cross-border investing or provide targeted exposure to domestic sectors like energy, banks, or utilities.

However, investors should approach every ETF—especially new or narrowly focused ones—with a clear framework. Ask yourself whether the ETF adds true diversification or merely satisfies a curiosity. Consider how it fits within your overall risk tolerance and long-term objectives.

Practical takeaways include comparing management fees, reviewing the fund’s liquidity, and checking how closely it tracks its stated index. Reading the prospectus may not be exciting, but it can reveal whether a fund’s structure and holdings align with your expectations.

The marketing of financial products, like any advertising, aims to persuade. That’s not inherently negative, but investors should recognize that these campaigns are designed to benefit the issuer first. New ETFs often highlight opportunity while downplaying limitations, just as casino ads emphasize excitement rather than odds.

To succeed as an investor, focus on substance over story. Evaluate what you are truly buying, how the fund earns returns, and whether the underlying assets make sense for your strategy. Ignore the glitter of themes that promise to make investing feel personal or thrilling. In the long run, steady analysis beats marketing hype.

The financial world will continue to borrow ideas from psychology, entertainment, and consumer marketing. Awareness of those influences can help you separate genuine innovation from clever promotion. In doing so, you strengthen your ability to make rational, informed investment decisions that serve your own interests—not just those of the ETF provider.