Advisor-class ETFs become an even rarer breed

Two former providers cite lack of investor demand and the proposed ban on embedded commissions.

Neil Jonatan 31 August, 2017 | 5:00PM

Advisor-class exchange-traded funds -- a Canada-only oddity in the global ETF industry that first appeared here more than a decade ago -- are becoming increasingly rare.

Two firms that until this year had offered advisor-class ETFs -- which pay embedded commissions to brokers -- have bowed out. Two others -- most notably BlackRock Asset Management Canada Ltd. with its market-leading iShares family -- continue to make this purchase option available for some of their ETFs.

Embedded commissions, mostly in the form of trailer commissions that fund companies pay to brokers and dealers for as long as an investor holds a fund, have sparked controversy in the investment industry, with securities regulators proposing that they be banned and large segments of the fund management and advisor communities strongly opposed. Though these commissions are paid by most traditional open-end mutual funds, they're an anomaly among the more than 500 ETFs now on the market in Canada and their total $130.5 billion in assets.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
CI Financial Corp25.37 CAD-0.35

About Author

Neil Jonatan

Neil Jonatan  Neil Jonatan is a Toronto-based financial writer specializing in student finance, currently enrolled in the Journalism program at Ryerson University.