November is Canada’s Financial Literacy Month, and to mark the occasion iShares, the exchange-traded funds arm of asset manager BlackRock, has released a research report detailing areas of investment knowledge specific to ETFs where Canadians may be lacking. The goal is to refocus investor education to deepen their understanding of the benefits of ETFs.
The survey, conducted by BlackRock Canada, highlights the growing awareness of the benefits of ETFs amongst Canadian investors.
“We know that for some Canadians, investing can be an overwhelming process, that’s why awareness and education are so important,” said Warren Collier, Managing Director and Head of iShares at BlackRock Canada. “Financial Literacy Month is a great time to draw attention to these issues. As the ETF investment landscape evolves, making ETF education accessible and easy to understand for all investors only grows in importance.”
The survey targeted over 1,500 Canadians to gain a reliable understanding of the country-wide knowledge and perception of these funds. Of those who took part, 43% said that saving and investing were a top priority for them to achieve a comfortable retirement; however, although ETFs have been around for 25 years, surprisingly only one fifth of Canadians were familiar with the product.
Although knowledge of the product itself appears to be relatively low, adoption of ETFs within portfolios has been on the rise in Canada, signalling the effect that financial advisors are having on the industry’s growth rate. In separate research released from BlackRock, the annual Global Investor Pulse, it was shown that over a quarter of Canadians use ETFs to gain fixed income exposure while 16% use them as the vehicle of choice for equity exposure.
Collier explains this trend signals that market participants are becoming increasingly aware of the specific benefits that ETFs may provide: “ETFs have really democratised investing, and fixed income is a great example of how they allow investors – of all types – to access exposures and markets that have traditionally been difficult to access in a cost-effective, transparent way.”
As ETFs are being adopted as core portfolio holdings with more frequency, BlackRock Canada has responded to this trend with the launch in March 2015 of the iShares Core – a suite of 14 low-cost ETFs, offering simplicity to investors with a focus on long-term holdings.
“Recognising that the ETF investing landscape may be complex, we launched the iShares Core to make it easier for investors to identify investments that may be suitable for the foundation of their portfolios, in a low-cost, easy to access way,” said Collier.
iShares have also initiated several educational resources for investors including the ETF Education Centre, detailing the basic structure and benefits of these products, as well as how they can fit within an investment portfolio. Another resource provided is the iShares Core Sample Portfolio Tool which instructs investors on how to build a low-cost, well-diversified portfolio using a basic set of tools.