Investors continue their march toward ETFs

Article Excerpt

Exchange-traded funds (“ETFs”) have taken the investment world by storm. In Canada, ETF assets under management have grown by 150% over the past five years, from $77 billion to $192 billion. At the same time, the number of ETFs has doubled. Robust growth was also evident in the U.S. where ETF assets doubled to the current $4.1 trillion U.S. Meanwhile, sales of traditional mutual funds have struggled as perceptions of high fees and poor performance have pushed investors to ETFs. However, the mutual fund industry is still considerably bigger than the ETF market. Globally, ETFs make up only about 10% of the $50 trillion invested in mutual funds and ETFs combined. In Canada, ETFs represent about 11% of the combined total while U.S. ETFs make up 18% of the investment fund total. Cost—the major ETF advantage Many investors rate low fees as the most important reason for picking an ETF over a similar mutual fund. Fees can have a significant impact on investment performance—if…

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