Thinking of investing in exchange-traded funds (ETFs)? Read the ETF Facts first!
Take the time to read the ETF Facts to find out more about the ETF before you invest.
Since December 2018, your dealer (the firm) is required to deliver the ETF Facts to you no later than midnight on the second business day following the purchase of ETF securities. You can also consult the ETF Facts on the website of the company offering the fund, or simply ask your adviser for a copy.
What is the ETF Facts?
The ETF Facts is a four-page document that summarizes key information about an ETF in a simple, accessible and easily comparable format. It is designed to help you make an informed decision about your investment by including information such as a fund’s investments, risk rating, past performance and the costs associated with owning it.
The ETF Facts are an opportunity to have a conversation with your registered investment adviser about your investments. You may want to discuss how a particular ETF would fit within your portfolio or how certain features of the ETF, such as its fees and expenses, compare to other ETFs.
What Information is in the ETF Facts?
Here are a few sections of the ETF Facts you should pay attention to:
Quick Facts:
Includes information such as the start date and size of the fund, as well as the ETF’s management expense ratio. The management expense ratio, or MER, is a combination of an ETF’s management fee and its operating expenses.
Trading Information:
Provides information about the stock exchange where the fund is traded, the ticker symbol used to identify it and the currency in which it is traded.
Pricing Information:
This section provides quick information about the price of the ETF units.Theaverage bid-ask spreadis the difference between the price that a buyer is willing to pay and the price that a seller is willing to accept.
What does the ETF invest in?
This section provides a snapshot of how the ETF’s investments are allocated. It may also detail the particular index it is attempting to replicate. You will be able to quickly see the fund’s current top ten investments as well as the investment mix of the ETF’s investment portfolio. This information can help give you a sense of how diversified the ETF is. Depending on the type of the fund, this breakdown can be by industry, asset class or geographic location.
Distributions:
If the ETF makes money, it may make payments to investors called “distributions.” The ETF Facts document will tell you how often distributions are made. Talk to your adviser to discuss how to manage any distributions you may receive (including interest, dividend or capital gains).Distributions are not guaranteed.
How risky is it?
All investments have a risk rating ranging from low to high. An ETF with a low risk rating can still lose money. ETFs do not provide any guarantees of future performance. As with any investment, you might not get back the money you invested. An ETF’s risk rating can change over time. It’s important to understand the risks and circ*mstances that could affect the ETF’s performance so that you can choose an ETF that is suitable for you. Additional information about the risk rating and risk factors is included in the ETF’s prospectus.
How has the ETF performed?
This section shows how the ETF’s units have performed in each of the past 10 years (or in each of the years that have elapsed since the ETF’s start date, if the fund is less than 10 years old).
Trading ETFs:
This section explains how ETFs are traded and includes information about pricing and orders. ETFs have two sets of prices: market price and net asset value (NAV). They buy and sell on exchanges at market prices that can change throughout the trading day. Market price can be affected by supply, demand and the value of ETF investment holdings. NAV is calculated after the close of each trading day and reflects the value of an ETF’s investments at that point in time.
Who is this ETF for?
This section explains what types of investors may be suited for the ETF. You and your adviser should consider its holdings, performance and risks to help determine if the fund is suitable for you.
How much does it cost?
This section shows a more detailed breakdown of the fees and expenses you would pay to buy, own and sell units of the ETF. For example, you may have to pay your brokerage firm a commission every time you buy or sell ETF units.
The ETF pays management fees and operating expenses. While you don’t pay these expenses directly, they affect you because they reduce the fund’s returns.
If you don’t fully understand the ETF Facts, talk to your registered investment adviser. Make sure you understand the investment before committing to it.
FAQs
ETFs have two sets of prices: market price and net asset value (NAV). They buy and sell on exchanges at market prices that can change throughout the trading day. Market price can be affected by supply, demand and the value of ETF investment holdings.
Who regulates ETFs in Canada? ›
How are ETFs regulated? Like mutual funds and other investments, ETFs in Canada are regulated by the securities commissions within each province or territory.
What are the characteristics of ETFs in Canada? ›
ETFs and mutual funds also offer professional management, so you don't have to keep track of every security the fund owns. However, ETFs are different in that they can be traded throughout the day on an exchange at a market-determined price, providing additional flexibility and efficiency.
What is the role of the Canadian Securities Administrators? ›
Securities regulators from each of the 10 provinces and 3 territories in Canada have teamed up to form the Canadian Securities Administrators (CSA). The CSA protects Canadian investors from unfair, improper, or fraudulent practices and fosters fair and efficient capital markets.
Who is the largest ETF issuer in the world? ›
How are ETFs regulated in Canada? ›
How are ETFs regulated? Like mutual funds and other investments, ETFs in Canada are regulated by the securities commissions within each province or territory.
What is the difference between US and Canadian ETF? ›
Besides cost, the main difference between a U.S.-listed S&P 500 ETF and a Canadian-listed S&P 500 ETF is the currency used to invest. It takes USD to invest in U.S.-listed ETFs, while investors would purchase Canadian-listed ETFs in CAD.
What is the structure of ETF in Canada? ›
In Canada, ETFs are legally organized as a mutual fund trust with the trust units listed and traded on stock exchanges like an individual stock.
When did ETF start in Canada? ›
The first ETF was launched in Canada in 1990, which paved the way for the introduction of the first U.S. ETF, the SPDR S&P 500 ETF Trust, in 1993. Designed to offer investors the diversification of a mutual fund with the flexibility of stock trading, ETFs took time before they started to grow rapidly in popularity.
How are ETFs taxed in Canada? ›
In Canada, 50% of capital gains are subject to tax and need to be included in the investor's taxable income. Canadians qualify for dividend tax credits that are intended to compensate them for income tax paid by the underlying Canadian companies the ETF has invested in.
Our mission
The mission of the CSA is to give Canada a national securities regulatory system that provides protection to investors from unfair, improper or fraudulent practices while at the same time fostering fair and efficient capital markets and confidence in them.
What are the CSA standards? ›
CSA standards are safety standards in Canada for electrical appliances, medical devices, machinery, equipment, etc. The Canadian Standards Association was established in 1919 as a non-profit, non-governmental standardization organization.
Does iiroc still exist? ›
As of January 1, 2023, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA) ceased to exist. These self-regulatory organizations were replaced by an amalgamated SRO named New Self-Regulatory Organization of Canada, or “New SRO”.
What is the largest ETF in Canada? ›
Last, but certainly not least, is XIU, the largest and oldest ETF in Canada. This ETF originally started trading in 1990, making it the first ETF in the world. It tracks the eponymous S&P/TSX 60 index, which unlike the Capped Composite does not hold small caps and is largely dominated by large-cap stocks.
Who are the big 5 ETF issuers? ›
The Big 5 ETF Issuers
- iShares (BlackRock): $2.59 trillion.
- Vanguard: $2.36 trillion.
- SPDR (State Street): $1.22 trillion.
- Invesco: $454.78 billion.
- Charles Schwab: $320.21 billion3.
Top U.S. market-cap index ETFs
| Fund (ticker) | YTD performance | Expense ratio |
|---|
| Vanguard S&P 500 ETF (VOO) | 7.7 percent | 0.03 percent |
| SPDR S&P 500 ETF Trust (SPY) | 7.6 percent | 0.095 percent |
| iShares Core S&P 500 ETF (IVV) | 7.7 percent | 0.03 percent |
| Invesco QQQ Trust (QQQ) | 5.8 percent | 0.20 percent |
The Investment Industry Regulatory Organization of Canada (IIROC) is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.
What is the difference between CSA and IIROC? ›
The CSA, the council of the securities regulators of Canada's provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets. IIROC is the pan-Canadian self-regulatory organization that oversees all investment dealers and their trading activity in Canada's debt and equity markets.
What is the difference between OSC and IIROC? ›
The Ontario Securities Commission and SROs
The OSC reviews advisers, exempt market dealers, scholarship plan dealers and fund managers. The IIROC reviews investment dealers and futures commission merchants. The MFDA reviews mutual fund dealers.
What is the difference between CIRO and IIROC? ›
The two predecessor SROs, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA), amalgamated to continue as the New Self-Regulatory Organization of Canada (New SRO), effective January 1, 2023, which subsequently changed its name to CIRO on June 1, ...
