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Mutual Fund Reps Soon Able To Sell ETFs Says Mutual Fund Dealers Association of Canada

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asked Apr 21, 2016 09:38 AM by
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Hello Jin and All,

First let me say that I am brand new to MoneyGeek.ca and I absolutely thrilled with the value and quality of the materials and tools available through the membership.

I thought the following article may be an interesting conversation point:

http://www.investmentexecutive.com/-/...source=facebook&utmmedium=social&utmcontent=etfs&utmcampaign=products

Specifically, if and when this happens, what concerns and opportunities do we anticipate in the Canadian market? Do we think this shift will happen quickly or gradually and do we think this will spur increased momentum in the creation of ETF products? Lastly, I am of the belief this may 'flood' the ETF market and cause expense ratios to drastically increase on certain actively managed ETFs, do we think this will impact our portfolios?

Thank you for your time and consideration,

Eric Drouillard

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answered Apr 22, 2016 10:40 AM by
Jin Won Choi gravatar image Administrator

Hi Eric, thank you for your encouragement.

I share your concern about the direction of the ETF market. I don't think there's much chance that mutual funds reps will sell ETFs, if selling them won't net them sizable commissions. If ETFs were to pay the reps commission, it would have to charge higher management fees like you suggested.

However, I don't see any reason why such changes will impact our portfolios. I expect management fees will be higher for new ETFs, but I don't think management fees will change for existing ETFs. If management fees do go up for existing ETFs, I'll have to think carefully about changing our portfolios.

Jin

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