Home Discount rate BMO ETF Mid-Year Report: Investors Bet on ETFs for Strategic Positions and Inflation Hedge

BMO ETF Mid-Year Report: Investors Bet on ETFs for Strategic Positions and Inflation Hedge

  • Flows reached $17 billion during the first semester of Canada1
  • Inflation poses a major risk, technology is under pressure and few places to hide for bond investors
  • BMO’s equally weighted banks ETF among top 10 by flow1

TORONTO, July 26, 2022 /CNW/ – BMO Global Asset Management (BMO GAM) today released its semi-annual report on exchange-traded funds (ETFs) highlighting the continued popularity and growth of ETFs in Canada. The report features experts from across BMO GMA’s ETF team sharing insights into the Canadian ETF market and ETF trends in volatile markets.

“Investors have struggled with the markets this year,” said Marc Raes, Head of Product, BMO Global Asset Management Canada. “ETFs continue to prove their value both strategically and tactically as access vehicles for satellite positions and as the basic building blocks in portfolios. Even in an environment of increased inflation, ETFs that focus on specific areas of the market such as infrastructure can provide good coverage and offer protection for investors.”

Key themes

Inflation: Alfred Lee (Portfolio Manager)

  • With aggressive assumptions for further rate hikes already priced in, inflation leveling would be the catalyst for markets to rally.
  • ETFs exposed to certain sectors, such as financial services and infrastructure, can offer investors a hedge against inflation.

Growth and innovation: Marc Raes (Product manager)

  • Rising inflation has hit growth stocks hard as companies valued on future cash flows now face a higher discount rate and lower growth estimates.
  • In the long run, these ETFs will continue to influence our behaviors and routines and have the potential to propel stock markets into the future.

Environment, Social and Governance (ESG): Erin Allen (VP, Online ETF Distribution)

  • Despite uncertain markets, geopolitical events and the pandemic, ESG ETFs continue to attract investors, driven by institutional flows.
  • BMO’s range of leading ESG ETFs targets neutral sector exposure, which under normal circumstances helps keep performance in line with the broader market.

Sectors: Chris McHaney (Portfolio Manager)

  • Canadian ETFs in the energy sector saw inflows of $730 million year to date.1
  • BMO’s Equal Weight Banks ETF was in the top 10 by flow.1
  • Utilities have posted a positive year-to-date performance, with the defensive sector having ties to the energy complex and high levels of current cash flow.

Dividend and low volatility: Chris Heakes (portfolio manager)

  • Shift from growth factors to defensive factors due to market volatility.
  • Investors have used ETFs to add strategic portfolio positions to capitalize on this market rotation: dividend ETFs have seen $1.3 billion new net flows since the beginning of the year.1

Fixed income: Matt Montemurro (Portfolio Manager)

  • A difficult first half for fixed income where the combination of negative performance drag from interest rate sensitivity and widening credit spreads left investors with very little safe haven.

To view the full report, please click here.

To learn more about BMO ETFs, visit: www.bmo.com/etfs.

About BMO Exchange Traded Funds (ETFs)

BMO Exchange Traded Funds has been a leading ETF provider in Canada for over 11 years, with over 100 strategies, over 25% market share in Canada.2, and $80.6 billion in assets under management. BMO ETFs are designed to stay ahead of market trends and provide compelling solutions to help advisors and investors. This includes a full range of ETFs developed in Canada for Canadians, such as profitable core equity ETFs tracking major market indices, and a wide range of fixed income ETFs; solution-based ETFs that meet customer demand; and innovation with smart beta ETFs, as well as combining active and passive investing with active mutual fund ETF series.


National BankETF report, June 30, 2022


morning star, May 2022

About BMO Financial Group

Serving customers for 200 years and counting, BMO is a highly diversified financial services provider – the 8th largest bank, by assets, in North America. With total assets of $1.04 trillion of the April 30, 2022and a diverse and highly engaged team of employees, BMO offers a wide range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and operates through the through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.


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