Fans of low-cost index investing cheered when they heard the world’s biggest mutual fund company, Vanguard, was entering the Canadian market. Although it’s unclear if Vanguard will offer the same low-cost exchange-traded funds (ETFs) they’re known for in other countries, their entry will probably raise awareness of ETFs in Canada.
According to 1,500 Canadians polled online in May by Leger Marketing and BMO ETFs, that’s exactly what the ETF market needs.
Half of Canadians aren’t sure of what exactly ETFs are, which they say is the main barrier to investing in them. Just 15% of those surveyed say that know what ETFs are and only a small percentage, 4%, invests in them.
Upon hearing about the advantages of ETFs, such as low fees and diversification, 60% say they would likely invest in them.
ETFS have only been around since the early 1990s and don’t have the same profile as mutual funds do, which have been around for a century.
But mutual funds are criticized for their high fees, while ETFs are often heralded for their low ones.
Many expect that ETFs will soon have an equally high profile as mutual funds.