Bank of Montreal’s exchange-traded funds business, the second-largest in Canada, will double its assets to about C$30 billion ($28 billion) in five years as their lower fees draws an aging population, said Rajiv Silgardo, co-chief executive officer at BMO Global Asset Management Inc.
“ETFs as a product still have lots of room to grow,” Silgardo said in an interview in Bloomberg’s Toronto bureau today.
BMO’s ETF assets have advanced 17 percent this year to about C$14.8 billion as of May 31 for about a fifth of the market, behind BlackRock Inc. Canada’s iShares business at 64 percent, according to data from the Canadian ETF Association.
Canada’s ETF market totaled about C$68.5 billion as of May and has advanced 8.7 percent this year, according to the data. Mutual funds assets in Canada, by comparison, have increased 8.3 percent to about C$1.08 trillion this year, according to May data from the Investment Funds Institute of Canada.
About 35 percent to 40 percent of BMO’s ETF assets come from institutional investors, Silgardo said.
“It’s probably one of our fastest growing segments,” said Kevin Gopaul, chief investment officer at BMO Asset Management Inc.
As part of the company’s ETF growth strategy, BMO has applied to list three of the products in Hong Kong later this year, Silgardo said.
The funds include a high-dividend fund, investment-grade bond product and a Hong Kong-listed banks ETF. BMO has no interest in pushing its ETF products into the U.S. at the moment, however.
“The U.S. is a very big and competitive marketplace,” Gopaul said. “It’s very difficult to differentiate yourself in the U.S. We have a footprint in Hong Kong to work with, and there’s a lot of opportunities there.”