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TMX POV - ETFs Are Booming In Canada, but Have Analytics Kept Pace?

TMX POV - ETFs Are Booming In Canada, but Have Analytics Kept Pace?

The growth in popularity of exchange-traded funds in Canada has been nothing short of remarkable.

Over the past decade, the industry has quadrupled, with asset managers increasingly launching ETF product suites —alongside their larger mutual fund businesses— to service the market's growing appetite for well-managed, low-cost investment funds. Today, there are over 800 ETF tickers listed on Toronto Stock Exchange, representing over $250B in assets under management.

Despite this incredible growth and robust investor interest, ETF-analytics products haven't kept pace.

Canadian investors largely still use the same stats and analytic methods they were using ten years ago to research and select ETFs. A typical Canadian investor, for example, still relies heavily on the description placed on the ETF, high-level screening (i.e. period returns, MERs, ‘average daily value' to represent liquidity, and country exposure pie charts), or ETF screeners built primarily for U.S.- or European-ETFs.

In contrast, large Canadian trading funds and asset managers have the means to sort through thousands of rows of raw data to build their own ETF analytics customized to their investment strategies. Unlike most Canadian investors and advisors, they have the resources to analyze risk exposure, ESG factors, transaction costs, underlying basket liquidity and total exposure to specific securities when owning multiple ETFs.

Why are better analytics and data transparency important for Canada's ETF sector?

In Canada, ETFs compete with their mutual fund cousins for investment dollars.

But, while ETFs have many advantages over mutual funds, including lower transaction costs and trading spreads, Canada's ETF market is only a fraction of the size of the mutual fund industry.

Yes - the ETF market is growing, but we think it can grow faster with better analytics.

If ETF investors in Canada can gain access to curated data and analytics —such as those available to large firms and international investors— they and their advisors can better determine how specific ETFs outperform specific mutual funds on the total cost of ownership; how overall risk changes from adding various ETFs to a portfolio; how the liquidity of an ETF differs from its underlying basket; or how the time of day can affect the spread or transactions costs associated with buying an ETF.

If these analytics aren't made widely available in Canada, eventually investors may turn to other products where analytics are more readily available, like US ETFs or mutual funds which, despite the ETF industry's progress, still have more highly developed distribution channels.

With the rise of thematic ETFs, like cannabis, it's even more critical for investors to have the ability to drill into the data of an ETF to assess total portfolio exposure to regions, holdings, and risk factors.

Recent Developments

In Canada, traditional market data providers have developed ETF analytics products, but these are often geared towards professional users, and many are not ‘ETF-first' products.

TMX recently collaborated with ETF Logic, a company with deep roots in the US ETF industry, to bring better ETF analytics to Canadian investors and advisors. The new platform called TMX Logicly, launched in March 2021, allows investors and advisors to compare the full range of ETFs in Canada with access to product information in a systematic and non-marketing-biased framework.

As the popularity of ETFs continues to grow, advisors and sophisticated retail investors will demand more meaningful insights to differentiate ETF products and understand how these products fit into their portfolios.

In all cases, better transparency into ETFs is a critical component to fuel continued innovation and adoption. With more transparency through analytics, everyone wins.

For more information about ETFs on TSX visit

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Selwyn Collaco

Chief Data Officer, TMX Group

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