The ETF market has been growing feverishly for the past 10 years, and Alain Desbiens, Director of BMO ETFs at BMO Global Asset Management, expects the momentum to continue over the next 10 years. "ETFs represent only a small part of the Canadian savings market. It's still only 12% of the mutual fund market," he says.  

During the year marked by the pandemic, three main investment areas stood out, Desbiens adds: Equity investments, fixed income investments and innovation. "We will continue to talk about equities and fixed income, and innovation will become increasingly important," he says. 

He emphasizes the importance of innovation and points out that since its inception BMO has introduced many new tax-efficient smart beta income-generating funds (including covered call funds) and index funds on the market. "We launched a successful line of ESG ETFs in 2020," Desbiens says. The term ESG refers to funds with environmental, social and governance factors. 

ESG: 10 years of strong growth projected 

These themes will continue to be important, Desbiens adds. “In 2021, innovation will also come from alternative investment strategies, as well as option and theme-based strategies," BMO's Director of ETFs explains. 

Among the themes, ESG factor funds will shine in the next few years, he believes. According to the National Bank Financial report, thematic funds had their best year in 2020 in terms of net sales, with 91% of those sales coming from ESG factor ETFs. "Similar to the overall trend in ETFs in the last 10 years, ESG factor funds will experience significant growth in the Canadian market over the next 10 years," Desbiens predicts.  

He observed that the United States is focusing its attention on so-called green infrastructure. "We will see the same thing in Canada and elsewhere in the world. ESG funds are a way of expressing values that will become increasingly important to investors.  

In its 2020 ETF Review, BMO writes that investors are increasingly aware of the impact of strong corporate governance on a company's resilience under stress. 

This article is a Magazine Supplement for the February issue of the Insurance Journal.