The Canadian ETF industry has been experiencing explosive growth in recent years, but it may not be quite as big as investors are being led to believe.
According to the National Bank of Canada, the Canadian ETF industry has a combined AUM of $188 billion when the reported AUMs of all the ETFs are added up. But when double counting is removed, that figure falls to $173 billion, a decrease of nearly eight per cent. According to a Financial Post analysis, BMO Global Asset Management, the second-largest ETF provider in Canada, does not remove double counting either.
There’s no real impetus to correct the numbers for double counting, Noble said, and there’s a clear benefit to providers for releasing the AUM figures as they currently do. Daniel Straus, National Bank of Canada vice-president of ETFs and financial product research, said that externally double counting ETF AUMs is not illegal.“I don’t think there’s any impact to investor returns that come from this practice because the size of the assets in a fund complex only really matter to the managers and shareholders of that company rather than the investors in the trusts who are getting the return experience of the underlying holdings,” Straus said.