(Bloomberg) — JPMorgan Chase & Co. has plans to capture a significant chunk of Canada’s retail-investing market with the launch of new exchange-traded funds and a hiring push north of the border.
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The New York-based bank, which is looking to tap into the flow of savings out of mutual funds and into products with lower fees, will give investors the chance to buy two of its actively managed ETFs — one focused on the S&P 500, the other on the Nasdaq-100 Index — in Canadian dollars, it said in a statement Tuesday.
“When we think about Canada, we have the right infrastructure in place and believe that we could very easily have a 5% market share in the ETF business over the next several years,” Travis Hughes, head of Canada for JPMorgan’s asset-management unit, said in an interview at the Toronto Stock Exchange after the bank opened markets Tuesday morning.
The country’s fast-growing ETF market had C$480 billion ($356 billion) in assets under management spread across almost 1,200 funds as of the end of August, according to the Canadian ETF Association. That’s up 31% from a year earlier and more than double the C$205 billion in ETF assets at the end of 2019.
Three dominant players in Canadian ETFs — RBC iShares,a partnership between Royal Bank of Canada and BlackRock Inc., and Bank of Montreal and Vanguard Group — collectively control 65% of the market, according to National Bank of Canada calculations.
JPMorgan has operated an asset-management business in Canada for four decades, and has recently been expanding its wealth-management team in the country, where it now has 25 employees in Toronto, Montreal and Vancouver. Hughes expects that number to double over the next one to two years and said the bank could add staff in Calgary as well.
The bank, which first began offering ETFs in the US a decade ago before expanding to Europe, Asia and Australia, will work with major investment dealers across Canada to sell its products. The ETFs offered in the country started trading on the TSX on Tuesday and provide exposure to US stocks as well as a focus on income generation.
George Gatch, chief executive officer of JPMorgan’s asset-management unit, said the bank wants to tap into the global movement of money into ETFs — he estimates investors shifted $800 billion from mutual funds to ETFs last year — and stand out with a hands-on strategy.
“The pendulum has swung so far toward passive investing, and we’re exclusively focused on active management. We don’t have an escape hatch, we have to be good,” he said. “This is an opportunity to take market share from the passive players in this transition that we think is likely to continue.”
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