Fidelity ETF Exchange: 2024 Canadian ETF Industry Recap

January 12, 2024

In this episode of the ETF Exchange, Étienne Joncas Bouchard welcomes back Director of ETFs at Fidelity Canada Andrei Bruno. Andrei highlights ETF industry trends of 2024. He points out flows in the Canadian ETF industry continued their strong momentum in Q4, bringing the year end total to $38 billion. Some notable headlines include fixed-income outselling equities, Bitcoin ETFs making a comeback as well as U.S. equities finally seeing a lift in December. Étienne and Andrei also discuss the approval of spot Bitcoin ETFs by the Securities and Exchange Commission and other trends to keep an eye out further down the road in 2025.


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In this episode of the ETF exchange, Étienne Joncas Bouchard welcomes back Director of ETFs at Fidelity Canada Andrei Bruno. Andrei highlights ETF industry trends of 2024. He points out flows in the Canadian ETF industry continued their strong momentum in Q4, bringing the year end total to $38 billion. Some notable headlines include fixed-income outselling equities, Bitcoin ETFs making a comeback as well as U.S. equities finally seeing a lift in December. Étienne and Andrei also discuss the approval of spot Bitcoin ETFs by the Securities and Exchange Commission and other trends to keep an eye out further down the road in 2025. 

This podcast was recorded on January 12, 2024.

Étienne Joncas-Bouchard [00:01:03] Hello everyone, and welcome to the fidelity ETF exchange. I'm your host, Etienne Bouchard aka EJB. And first of all, I'd like to wish everybody listening in a Happy New Year. This is our first episode of 2024. And today we're going to have, uh, kind of what we do every, you know, to start every year recap of the previous calendar year from a flow standpoint, industry trends, uh, in the Canadian ETF industry. And joining me today, once again, I think, uh, definitely by far now the most common recurring guest that we have, and I always love having Andre on because we tend to have very fluid and candid conversations around the ETF industry. That is Andre Bruno, director of ETFs at fidelity. Andre, thanks again for joining us. Welcome back to the podcast.

Andrei Bruno [00:01:47] Always great to be here and just want to echo your sentiments. Happy New Year to everyone. Uh, last year wasn't uh, wasn't too bad of a year in financial markets. So here's to hoping for another decent year in financial markets.

Étienne Joncas-Bouchard [00:02:00] Uh, absolutely. I was, uh, I was going to ask you, uh, if there are any particular resolutions that you took for, for the year, are there any.

Andrei Bruno [00:02:07] Um, nothing too crazy. Um, I don't know what the stats are on people who keep their resolutions, but I feel like it's probably pretty low. Um, but, you know, just trying to make it out to the gym a little bit more, be a little bit healthier. So nothing to, uh. It's pretty cookie cutter as far as resolutions go, but, uh, so far, so good.

Étienne Joncas-Bouchard [00:02:26] Ice nice a classic. So trying to hit the the gym a little bit. I actually had that as a resolution two weeks ago. Um, and, uh, see, I'm in those statistics already now because I haven't been yet, so, uh, onto the onto the next resolution. Uh, and I've decided to now clean up my mailbox more properly. I've got folders everywhere. Everything's organized. So that's my resolution for, for 2024 to being a bit more organized. But, uh, jokes aside, and I think this is going to be a good episode, like you said.

Uh, pretty good year for financial markets last year and really a strong Q4 where you saw an everything rally from bonds to equities. You got to, uh, more breadth from a stock standpoint, from a sector standpoint, it seemed like a really good relief, if you will, or, um, you know, a nice way to wrap up the year and kind of, you know, everybody have a happy holidays following that. And, you know, as we roll up into this year, I think it's, it's it's a great picture. It feels like there's very diverging opinions on where markets are going. Some would echo that, you know, we have achieved a soft landing and we might see some type of an early cycle mid-cycle dynamic. Others say we're just kind of a little bit stuck in that, uh, that late cycle. And maybe we're getting a bit ahead of ourselves. So we're going to chat a bit about that. But, uh, for the the starting point of the episode, I want to focus on flows from last year, just so our audience has an idea of what happened in the community.

If you have industry and I'd say really good year all around, about 38 billion in net new assets came into the Canadian ETF industry. That's following up about 35 and 2022, a really solid 52 in 2021. But now if you look at a three year average, uh, some really solid inflows numbers and just comparing to, you know, another vehicle that that we're very familiar with here, obviously Fidelity Mutual Funds has been two negative years, uh, in a row. So the ETF vehicle, uh, really, you know, maintaining or being resilient, if you will, from a demand standpoint, uh, showing some strength in terms of categories that have been, uh, popular fixed income. We talked about it all last year. I mean, uh, we do these quarterly recaps pretty much always together. So I'm sure you remember some of the conversations we had around fixed income and really that leading the way, if you will, on that 38 billion, about 21 billion of that is fixed income, 44% of that. So a bit less than 10 billion is, uh, cash alternatives.

We also saw long bonds starting to get bought as yields came down in the last couple months of the year, maybe an appetite opening there so we can chat about that on the equity side. Uh, pretty solid 13 billion or so, uh, led the way by international and then followed by Canada and then barely barely positive number for U.S. equities, actually only achieving that in December with 1.5 billion in net new assets in December, bringing the year total to 600 million. So we were actually negative on US equities up until, uh, December, which was, uh, quite an interesting and interesting sight. We saw crypto rebound also $1 billion in net new assets. And that was kind of the first time since 2021 where, uh, we saw an appetite and obviously coming off really strong performance for Bitcoin north of 130% last year. Uh, you're seeing investors maybe opening up to that the asset class a little bit, maybe a little bit of FOMO.

Anyways, that's another topic I think that's worth mentioning. Uh, and those are really the main ones that I had. Uh, Andre, did I miss anything before you? You know, I kind of, uh, pick your brain on some of those headlines.

Andrei Bruno [00:05:45] No, I think you got, uh, most of the high level talking points there. I mean, I think, you know, just taking a look at these these numbers. I think probably one of the most interesting ones to me is that, uh, US equity flows number, um, like you mentioned, they're just just getting over the, uh, got over into the positive territory. There in December. Um, but if you take a look at returns for last year, you know, kind of US equity markets were where you wanted to be. Um, you know, the the S&P was, you know, somewhere around, you know, 26%, I believe, last year on a total return perspective.

So certainly outpacing kind of Europe. Um, you know. Yeah. Uh yeah MSCI iffy or S&P. Uh S&P TSX rather. Um, so it's interesting to see that kind of the the the returns or sort of the the flows weren't following returns last year from an equity perspective. Um, take a look at the fixed income side of the ledger. As you mentioned, a ton of those flows were kind of in the money market kind of cash alternative space. And we saw that trend kind of continue all year. Um, you know, a little bit different from the year before where it was heavily dominated by that, uh, space. Um, we did start seeing, you know, especially in the back half of the year, we started seeing a little bit more interest in duration products. Um, whether that was just going long, long products or just kind of broad market indices, which tend to have, you know, slightly longer duration relative to those cash alternative products. Um, so it was it was interesting to see. But again, yeah, the US equity number was probably the most surprising from a flow perspective to me.

Étienne Joncas-Bouchard [00:07:12] Yeah. No, it was definitely one that that that caught my eye. And you know, it is surprising because the performance like you said, was really strong. And it took like a long time. Right. It's like up until December like that was that was the big difference. So you know, maybe this year you know when when investors are going to look at their statements and you kind of figure out that the US market led the way last year, maybe we see a bit of catchup to start the year. I it's going to be interesting to see once once January ends to see if that continues. But that one was definitely um, yeah, surprising one. And like you said, the cash alternatives are high interest savings ETFs.

The top two selling ETFs last year, like standalone ETFs, were both in that category. Uh, you know, for those to top two ETFs brought in 6 billion. Uh, so that was really the story I think of the first three quarters. And now you're starting to see a bit of appetite for bonds, which is a little bit you know, it's sometimes uh frustrating when you're on, on, on our side, if you will, from, from an asset management standpoint, this is an opportunity. I think that, uh, a lot of, uh, managers and industry experts were kind of predicting, you know, that bond markets are in a good spot from a return standpoint, but it seemed like there wasn't an appetite for it because of the volatility that we saw in 2022. And I think it was 2020 or 20. Yeah. So sorry 2022 volatility 2023 not so good up until the fourth quarter. Does that really start to heat up? You think as we start this year, do you think investors are going to start to deploy maybe some of that cash or. You know, maybe you're going to wait for a bit more evidence. I think you know this. It's getting there.

Andrei Bruno [00:08:47] Yeah. I mean, I think a lot of the hesitancy last year was probably surrounding just a lot of this, you know, higher for a longer talk with the fed. So, you know, I think a lot of people maybe didn't get a sense of urgency to have to pile into the duration trade. Um, you know, given that type of rhetoric, um, you know, we did recently get a CPI print in the States that was, you know, a little a little bit hotter than expectations there. Um, so again, certainly going to be reinforcing the Fed's notion of higher for longer again. We're still not at that 2% band whether you're looking at Canada or the US.

Um, so I don't think central banks can signal easing just yet. Although you know, we do need to disaggregate Canada from the US a little bit here because obviously GDP numbers in the US are diverging, um, from GDP numbers in Canada, we did get um, a negative quarter recently out of Canada. So there's certainly a lot more macroeconomic headwinds facing Canada relative to the US. But I do also just want to take a quick step back, if we can, just to talk about some of these has some products and cash products because we we we we have gotten some news surrounding these products. So, you know, IFC was doing a review on these products to determine how, you know, how banks need to treat these assets on their balance sheet. So to give folks just some, um, a little bit of insights into how these two ETFs or some mutual funds work is, you know, uh, clients will buy into these fund companies will take these, and we will place these deposits at financial institutions.

So what we're talking about is how those financial institutions that receive those assets from the issuers on the back of these ETFs, how do they treat those on the balance sheet. So you know, when these first came out there wasn't a lot of clarity on how the banks should treat these assets. Some were treating them as retail. Some of they're treating them as wholesale. So you know ultimately kind of the two long didn't read version and answer of where things landed is that these are to be treated as wholesale deposits. Why does that matter. Why doesn't we why do we care? It's because for the banks, uh, the way wholesale deposits get treated versus how retail deposits get treated, are very different from liquidity ratio perspectives. Um, so from when they're treated as wholesale, it's a little bit more onerous. And they have to have one on one coverage for those assets. So if they get a if they get a, you know, has a ETF deposit for a dollar, they need to have a dollar of asset underpinning uh, that, that particular deposit.

So again, long story short, the way these are getting treated at the banks is a lot more onerous on their liquidity profile. As a result, we are expecting to potentially see some of those Hisa rates come down before there are a lot more competitive. They're typically priced somewhere, you know, overnight rate plus a spread. Um, now a lot of things that we're hearing when we're talking with banks is we're hearing that those rates are probably going to come down closer to the overnight rate. Uh, so again, I think you're going to see in terms of the competitiveness of these ETFs in history, mutual funds moving forward, I think they're going to be a little bit less competitive than they historically were. They'll probably be a little bit more in line from a yield perspective. Um, somewhere closer to kind of where money market funds are priced. So, um, just something interesting that we're seeing and we'll see if that's reflected in the flow for these, uh, has the ETF products, uh, on a go forward basis here.

Étienne Joncas-Bouchard [00:12:02] That's a great parentheses because that is coming up. The deadline for compliance is January 31st for those issuers. Um, and I think you've already started to see some of those products be revised down a little bit there. Yields. Um, you actually saw a closing of what we, you know, the, the spread, if you will, versus the overnight rate on some products come down. So that likely continues up until January 31st. Not to say that, you know, say instead of 5.5 you're getting 5% like for some that's you know, that's it's not a material impact on kind of the objective from an investment standpoint. But, uh, I think what's going to happen is more, uh, you know, the catch up are the FOMO that starts to set in as bonds start to work. Um, and, you know, we saw like a 1% drop in the ten year in Canada, in the US. Uh, you know, over the past couple of months. That was a nice return, right? Like, not not double digit, but close to double digit on some products, uh, and in a very short span.

And when you look at. Yeah, this does one thing, uh, you know, but when you're considering something like a GIC, for example, which is, you know, locked in for a certain period of time, this is where you expose yourself to potential like a substantial opportunity costs if you get capital gains, opportunities with, with fixed income. So, um, I think that's that's a story that will develop throughout the year. And I think the longer the rally for bonds goes, not necessarily to say it's going to be like, uh, like we're not necessarily calling for, you know, a record year, but, you know, just in line on average performance from, from bond markets would be, I think, a welcome sight for, for all that's consistent throughout the year.

Andrei Bruno [00:13:39] Yeah. And, and I think kind of what you're highlighting there is. Is the reinvestment risk. So, um, you know, your risk on buying short term paper versus, um, you know, buying bonds that have a longer duration. So I think certainly. And when we think about the reinvestment risk, a lot of times we're comparing those cash rates in Canada to, you know, whether it's Canadian bonds, international bonds or US bonds. So, you know, those cash rates in Canada are obviously highly tied to kind of where the overnight rate here is in Canada.

So we certainly do have, um, you know, there's there's certainly a higher probability that the BOC cuts this year relative to the fed. I mean, if you take a look at markets, both U.S. and Canadian markets are pricing in cuts on both sides of the border. Um, you know, I think the economics in Canada make a lot stronger case for the potential of cuts, especially when you overlay that with, you know, the Canadian consumer, their debt levels, our mortgage market here in Canada as well, we certainly are a lot more sensitive to interest rate moves. So, you know, if we do get into a recessionary environment here in Canada, um, you know, I think the BOC will have no choice but to act and cut rates. Now, the one interesting case in Canada is, you know, if we print a Q1 negative GDP, you know, that that technically puts us in a recession. I believe I believe Q4, we print a negative.

Étienne Joncas-Bouchard [00:14:56] Uh, I think it was Q3 and we're awaiting Q4.

Andrei Bruno [00:14:59] That's right, that's right. Excuse me. So Q3 waiting for Q4. So if we print that negative Q4, that puts us in a technical recession in Canada. Uh, but it also puts the BOC in a tough spot since inflation is still still hovering. I think I think we're still north of 3% in Canada. Um, the one thing to appreciate in Canada versus the US is our our BOC mandate is to maintain inflation between a one and 3% band. Where is the US is a little bit more prescriptive in that they have a 2% target. So you know, if theoretically we get to 2.9%, we have a recession. You know, BOC, you can say we're in our band and we can cut rates, but it would be interesting. Um, not in a positive way. It would be interesting if we do, you know, get that technical recession and we're still north of 3%. I think it puts the Bank of Canada in a bit of a tight position. Um.

Étienne Joncas-Bouchard [00:15:46] Yeah, a little bit of a handcuff. Right. Because, you know, if you if you start easing too much, then, you know, people get a real nice sigh of relief. And then we're back on, uh, adding, adding debt to the load that we already have, which you said was substantial. Now, there's one point there, actually, I was I was going to bring it up when in your last point then how you brought it back up. So it's perfect cause I forgot it was, uh, the rate cut expectations that the market, uh, is expecting for 2024 seems a little bit ambitious. And you mentioned for the US and Canada's different. Fine. If you look at the overnight index swap market right now, it's telling us there's six rate cuts expected in the US for 2024 and five for Canada. So even so technically less for Canada, which I thought was absolutely like shocking, uh, considering everything you just described, you know, the the overleveraged consumer, um, you know, a labor market that is not as productive.

So all these things together. Does that raise a little bit of an alarm saying, or is the mark? Did the market get too enthused by this dovish ness from central banks or potential dovish this from central banks this year. And you know even the inflation report that you said was a bit above expectations in the US this week uh didn't even budge. Those did not budge. The the rate cut expectations by anything. If not they actually moved up a little bit in terms of probability for the first cut in March, went from about, you know, 60% chance to 70% chance. So what is the market seeing that the that we're not maybe or you know, there's something I'm not grasping here.

Andrei Bruno [00:17:21] I mean there's a lot of people out there that are smarter than me, but when I take a look at those numbers, I do think they're a little bit overly ambitious now. I mean, you know, uh, I don't see a reason why the fed needs to cut interest rates in the absence of a recession. I mean, we still have strong employment numbers. Um, you know, inflation is still hot. You know, why is the fed going to cut interest rates right now? And you know, we're we're in January already. So you know, do you think the Fed's going to start cutting in Q2. I just I don't see that. I don't I don't I don't I don't see Q4 printing negative in the US. So to me like worst case scenario they print a negative Q1, negative Q2. And then Q3 we can start talking about cuts. That's not my base case.

But you know, I think you would need to see that scenario for them to start thinking about cuts. So let's say that plays out okay. So now we have half a year to get six cuts in. So basically either we're cutting 50 basis points at certain meetings or we're cutting out every single meeting. It seems it seems a bit aggressive for me on the US side of things uh personally. And again, this isn't even getting into, you know, the argument you made at the start talking about, you know, was that a soft landing? And are we back into, you know, early mid-cycle in the US. You know, in that scenario? I don't I don't see any reason why the fed needs to cut the economy continues to hum along. There's no reason for them to cut.

Étienne Joncas-Bouchard [00:18:48] Yeah. No, it seems like all market participants really mistook a little bit the you know we're going to put hikes on pause for next move. Were cutting type thing right. Anyways. Well we'll see. Maybe there's you know some things that we're missing and maybe we get, you know downward revisions or surprises to the downside. But uh, right now it's kind of like you said, I think a bit overly ambitious, but, um, anyways, I want to move on to another topic because it is the number one topic in ETF land from a global perspective. And this is on the back of the news on January 10th that the SEC was finally approving spot Bitcoin ETFs in the US with every single issuer lined up, uh, to uh, to, you know, to launch a new product. Um, I've gotten multiple questions on this, whether that's how is this going to impact, you know, Bitcoin ETFs in Canada. How is this going to, you know, what are flow's expectations for the year. Like is this going to be massive. Is it going to be a bit of a flop. Like what is your take on this whole, uh, approval by the SEC? And kind of I guess the first few days already that we've seen now, uh, this has been live, you know, we're recording as of January 12th, so it's we're in the second day now, uh, of this being available to us investors. So perspectives on that.

Andrei Bruno [00:20:07] Yeah. So I think, uh, you know, I think the, the numbers are pretty decent from, uh, from a flow perspective yesterday and the first day in market, um, I think generally, um, you know, simple kind of econ 101 if we're talking about Bitcoin here, um, you know, with the launch of these products, obviously, you know, you'd expect an increased demand in Bitcoin in themselves, which, you know, generally would be positive for the asset class. Um, certainly there was a strong run up in Bitcoin leading up to this. So yeah, you can you can get into the conversation around whether or not it's priced in. Obviously to an extent it probably is. Um, you know, as it relates to the Canadian ETF market and uh, the crypto funds that are up here, um, obviously price pressure is probably the main kind of outcome from all of this. You know, if you take a look at the price points, uh, on the US versus Canada, um, so obviously that's going to have some implications up here, uh, for us. Um, but uh, no, it's interesting. Obviously, this is obviously a step towards the notion that Bitcoin is a, you know, an established asset class. You know, we're obviously seeing acceptance from large institutions in the US. Um, so again, I think it's certainly a positive development for the staying power of Bitcoin.

Étienne Joncas-Bouchard [00:21:18] Yeah I think those are all great points. Like you said I think it's been fairly positive right so far. Um, a bit of turn right from, you know, existing products that were futures based. Uh, you know, some, some people switching over to uh, spot bitcoin and things like that. But like you said, the most important thing to take away from all of this is that this is just making it more accessible, and it's making it also more. Have a higher standard in terms of, uh, I guess if respect from the investment industry, knowing that the SEC is kind of put their, their, uh, approval on it, uh, it seems like demand will definitely increase. But to a certain extent, like you said, from a price appreciation, it's not like this came out of the blue and nobody was expecting it. Um, so I think, you know, a lot of the anticipation last year was built up. Uh, and so far now I'm just looking at the Bitcoin price as you, as you were explaining that.

And you know, the it kind of moved up initially when it was announced. And now it's back down a little bit. So from a price movement standpoint it's kind of like a it's a nothing burger right now. But I think long term it's just beneficial from, from a uh, demand standpoint. But also like right, this is just we're increasing supply in a sense from act from an access perspective. But um, yeah, I'll really good points. And it's going to be interesting to see how it goes. We've got estimates from everyone in the industry saying, oh, we're gonna get 20 billion inflows a first year. Some people were saying 100 billion inflows in the first year. I don't think it really matters. I think the thing that's the most important is that it is accessible now from a vehicle standpoint in the US. And, um, yeah.

So it's gonna be interesting to see, um, another place I'd like to go and kind of touch on, if you will. Multi-Asset ETFs in a year where the 6040 had its revival post 2022, which a lot of people were kind of burying the 6040, saying, you know, asset classes now have stronger correlations than ever. Uh, it's all, you know, don't don't fight the fed. It's all monetary, policy driven, blah, blah, blah, blah, blah. You saw, uh, you know, the 60, 40 work, uh, you know, bonds were, you know, helping in certain times when equities were not doing so well. Uh, you know, look at your 60, 40 is north of 10% on a lot of products, uh, you know, dependent on, you know, obviously, the issuer, the structure and the, the asset allocation mix. But, uh, for the most part, it was a good year. And you actually saw 1.8 billion in net new assets coming into that category in Canada. Obviously there is some of that that is not 6040. It's, you know, 100% equity, uh, mandates, but there's still kind of ETF portfolios. Um, thoughts on, on on that area?

Andrei Bruno [00:23:51] Yeah, I mean, I think um, especially given over the last, you know, let's call post oh eight where interest rates were extremely low. I think this is what kind of started this conversation about, you know, is the 6040 dead when, you know, interest rates were given you, you know, bonds were giving you absolutely nothing, you know, one 2%. Um, you know, I think now that we're in more of a normal interest rate environment, to your point, the 6040 is kind of getting its revival.

Now, I don't want to discount, you know, the the conversation surrounding, you know, correlations. Um, you know, and I think we probably will, you know, take a hard look at the 6040 and what the 6040 of the future looks like and taking a look of non correlated asset classes. Um, but again, I don't think it's dead. Um, but I think over the next, you know, five, ten, 20 years, uh, it's going to change on what that kind of classic 6040 looks like. Uh, and again, you know, I don't I don't know exactly what it's going to look like. I'm sure we'll we'll be taking a look at alternative asset classes that have, you know, uh, a different correlation towards these kind of classic bonds in, in, in, in equities. And I think those will find a way into that kind of 60, 40 portfolio. Um, so, you know, I don't want to say 6040 dead. I don't want to, you know, it's I think it's back, but I think it's going to I think it's going to look different and it's going to evolve for, for kind of how financial markets are today.

Étienne Joncas-Bouchard [00:25:17] That's a great point. And you've already seen a lot of kind of the 6040 before was like you take you know, I guess when you're looking at it from a benchmark standpoint, it's like 60%, you know, you're you're if you're a U.S. investor, for example, 60% S&P 540% U.S agg. Uh, and that was your 6040. And that's how it's, you know, charted historically. And if you're in Canada, the S&P, TSX and the, you know, uh, Canada Universe Bond Index or Canadian Aggregate Bond Index, um, but now, you know, does that mean you include, you know, a small sleeve of crypto? Does it mean you add, you know, a long, short strategy, you add some other alternatives, types of strategies that can help offset maybe bonds and equities moving a bit more in line. But uh, definitely diversification is not going away. Maybe the 6040 mix is going to change a little bit. To your point. Um, another thing I want to I and this last, last topic we'll talk about and we can kind of wrap it up after that with maybe some outlooks for, for this year. Um, active management seems like it's starting to claw away a little bit of the dominance of passive smart beta had a, you know, a bit of a run, if you will. Uh, you know, let's say for five, six years, last year was a bit of a hiccup, if you will, for a lot of factor ETFs from a flows standpoint anyways. It's not I'm not we're not talking performance. We're talking about from flow standpoint. Has that shifted to active and is active. Eating away a little bit from passive slowly and surely. Kind of like kind of like what we saw in the US. But this is from a Canadian perspective.

Andrei Bruno [00:26:43] Yeah. I mean active certainly growing at a faster clip relative to smart beta and passive. Um, and now it it would be interesting to know, you know, I think a part of that is has to do with the vehicle itself and the adoption of the vehicle. Um, I think a lot, a lot of folks, whether that's your DIY investor or whether it's your financial advisor, is starting to adopt the ETF vehicle a little bit more. Uh, so I think that's that's a decent part of it as well. Um, I think on the other side, you're also seeing some pretty, some pretty novel stuff come out in the ETF vehicle as well. Well, that's, you know, options based derivative based strategies that have that have garnered some flows as well. And those are, um, not not unique TFS per se, but we have seen a lot of, you know, ETFs off the shelf that do employ, uh, bespoke strategies such as that. Um, so I think kind of the mixture of those two is kind of what's leading to, to kind of the active ETFs growing at a, at a larger clip, um, you know, relative to the smart beta and passive categories.

Étienne Joncas-Bouchard [00:27:43] Great. No, I really like that. And I think I agree that like you said, there's just have been it seems like the further we go, uh, more saturation there is among, you know, market cap weighted indices, like there's only so many different things we can replicate. Based on size. Uh, it seems now like you're getting innovation on the active side or, you know, uh, managers that have been around for a while, uh, making their, their portfolio accessible via the ETF vehicle, which is just, you know, the more choice, the better. And I think that's we're just going to see now kind of the way that the mix shapes out. And I guess the last point I'll make to to your point, which was um, with regards to the ETF vehicle ETF being a vehicle of choice for direct investors, for advisors, and for, you know, for just investors in general institutions also is you want to have these tools available to you. And if there's a manager that can allow you to get differentiated approaches, uh, there's likely going to be demand for that as, as we move forward. So, uh. Last thing before we wrap it up, Andre. One idea for 2024 or 1 prediction for 2024 of what you think is going to be popular from a flow standpoint, and that's not necessarily. You know, very blatant. Let's dig a little bit. Something a little bit different. What are you expecting that maybe it's not, you know, in the sunlight right now.

Andrei Bruno [00:29:05] Yeah. Probably not necessarily something that isn't in the, in the, in the spotlight. It's kind of off to the side.

Étienne Joncas-Bouchard [00:29:11] I said sunlight spotlight is the right word.

Andrei Bruno [00:29:14] Yeah I mean I and I get I think I think we've been I think we've been talking about you and I have been talking about this on podcasts for a long time, but I think, uh, I think I think duration is, is, is going to, is going to be in the spotlight at some point. Um, again, we're going to people are going to be convinced that we're finally at peak interest rates. I mean, Canada, I think arguably we're for sure at peak. And when I see peak interest rate here, as folks, I'm talking about the yield curve. Um, not necessarily overnight rates. I think most people think that the Bok in the fed are done hiking overnight rates. Uh, but just in terms of the yield curve, um, I again, the biggest bogey there, I think, um, on the Canadian side, I think I don't want to say you're safer. Um, but I don't see yields marching a lot higher in Canada. Given the macroeconomic backdrop, I think your risk in the US is if we do get that soft landing and, you know, we're resetting back to, uh, you know, early, early stage or, you know, you know, middle, middle of the road cycle here. You know, you could see kind of yields push up, push a little bit higher and, and steepen that yield curve a little bit. So I think that's your bogey and your risk on the duration trade on the US side.

Étienne Joncas-Bouchard [00:30:29] I love it. I'm going to go with there's going to be a bit of a return appetite for ESG and I don't this is I was looking at flows, uh, you know over the past couple of weeks. And I was thinking, you know, we haven't talked about ESG and, you know, um, I guess it falls into the thematic bucket, uh, to a certain extent, that's kind of been, you know, it was it was a topic that, uh, was great whenever everything was going up. And then, you know, when we had a few challenging years from a vol standpoint, 2022 2023, kind of it's different. But 2022 is definitely different. So as 2021, we kind of left away some of those thematics. And I think those are going to have a strong comeback this year. Um, there's a huge opportunity set in terms of product lineup. Um, and I think that it's going to also move more to the active side a little bit. So, you know, thematics active, um, ESG or to a certain extent, um, you know, impact funds, I think those will make its way back into, you know, positive flows and might surprise some people with the size could be wrong.

Andrei Bruno [00:31:36] All right. Well, we'll reconvene in the air and. I say we'll reconvene here and see if any of those came true.

Étienne Joncas-Bouchard [00:31:43] I look, hey, we had the I had to come up with something a bit different because I'm fully with you on that, I think, um, I think bonds will likely make a comeback and from and they've been good from a flow standpoint. But now moving away from cash and back into more duration type products as we kind of just return back to normalcy, if you will, going away from no duration, adding some duration. Um, but anyways, this is great. Thanks so much for coming back on. Uh, we look forward to having you back sometime soon, and I wish you the best to start the year. And yeah, we'll see you soon.

Andrei Bruno [00:32:18] Thanks for having me. Always great to be here.

Étienne Joncas-Bouchard [00:32:20] Awesome. Thanks. And thank you, everybody for joining us. This is the first episode of 2024. Have a great rest. Your day.

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