The first exchange traded fund in the world was listed on the Toronto Stock Exchange in 1990. Warren tells the story and discusses the importance of innovation in driving Canada's ETF industry forward.
Canada’s 150th anniversary is an awesome occasion to celebrate the country’s best innovations over the past century and the half. As a nation, we have the chance to revisit stories about some our greatest inventions including the telephone, Canadarm and snowmobile, and also learn – perhaps for the very first time – about some of our more obscure accomplishments such as the Walkie Talkie, cardiac pacemaker, and five-pin bowling.
Another “Made in Canada” innovation that deserves some attention is exchange traded funds. The first ETF listed anywhere in the world happened right here on home turf when the Toronto Stock Exchange introduced the Toronto 35 Index Participation Fund, known as TIPs, in 1990.
The fund, which is now the iShares S&P/TSX 60 Index ETF (XIU), preceded the first U.S.-listed ETF by three years, according to an article in The Globe and Mail that also noted how earlier efforts at creating an exchange traded fund south of the border were thwarted by a successful lawsuit from the Chicago Mercantile Exchange.
The TIPs launch surely benefited from the ingenuity of Canada’s capital markets and highlighted the growing desire among investors for transparent, low cost, and flexible exposure to the country’s primary blue chip stock index.
While the focus has expanded to include all sorts of different exposures and strategies over the past 27 years, it is this type of value proposition – offering transparent, low cost and flexible solutions – that continues to resonate with investors and guide the global ETF industry forward.
The number of ETFs trading worldwide now run in the thousands with total assets under management over US$4-trillion at the end of May, according to BlackRock data. In Canada, meanwhile, ETF assets have more than tripled since December of 2010 and tallied close to $130-billion through May.
We believe this tremendous growth could continue both here and abroad as more investors learn about the potential benefits of ETFs and how they can help build stronger portfolios. But this confidence shouldn’t be confused with complacency. The universe of available ETFs has consistently evolved over the years to provide greater access to equity and fixed income markets as well as smart beta and actively-managed solutions.
Canada’s ETF industry needs to remain innovative and committed to pursuing products and services that add value to investors who use them. After all, that’s the Canadian way.
Happy 150th everyone.
Warren Collier is a managing director and head of iShares Canada. He is a regular contributor to The Blog in Canada.
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