BMO: Record $10 Trillion Year for Global ETF Industry

BMO Global Asset Management (TSE: BMO) released today its annual ETF Outlook Report, which looks at the exchange-traded fund (ETF) market and identifies the key trends that are expected to shape the industry in 2022.

A Record Year for the Global ETF Industry amid Ongoing Pandemic Volatility

Assets grew globally and were driven by stronger flows and markets. At the end of December 2021, the global ETF industry had 8,552 ETFs from 571 providers on 77 exchanges in 62 countries and assets of $10 trillion.

In 2021, the Canadian ETF sector saw its second year of record flows, thanks to equity ETFs.

A decade ago, ETFs represented just over $40 billion in assets across 230 symbols in Canada. Today, they represent $323 billion in assets and nearly 1,200 symbols and have gone from a hot topic to a mainstream investment.

From dominant high-beta ETFs that provide investors with market returns, to precise ETFs that provide investors with access and efficiency, ETFs have combined the best of exchange trading with the benefits of pooled investment products.

Inflation is the main concern heading into 2022. Trends to watch in 2022 include the continued importance of ESG and fixed income.

Management Commentary

“ETFs have played an important role in financial markets with record growth and volume during a tumultuous year. ETFs provide efficient access and liquidity across both broad and precise exposures as investors balance the stops and starts of the continued COVID-19 pandemic with strong equity market returns,” said Mark Raes, Head of Product, BMO Global Asset Management Canada.

“ETFs proved their value as market access vehicles once again, as Canada became the first country to launch a physical crypto ETF, and equities captured record-breaking inflows. Inflation is the dominant concern heading into 2022 as investors look for sectors of the market that will benefit from increases in pricing while looking for fixed income innovation.”

Wall Street’s Take

Two weeks ago, Barclays analyst John Aiken upgraded BMO to Buy from Hold and raised its price target to C$165 (from C$140). This implies 15.7% upside potential.

The rest of the Street is cautiously optimistic on BMO with a Moderate Buy consensus rating based on seven Buys and three Holds.

The average Bank of Montreal price target of C$157.38 implies 10.2% upside potential from current levels.

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