Toronto-Dominion Bank (TSX: TD)(NYSE: TD) is now on the bank-offered ETF bandwagon, with a growing roster of its own line of ETF products aimed at helping Canadians lower fees and increase long-term total return potential.
As you may know, I’m a huge fan of Bank of Montreal’s extensive lineup of cheap and effective ETFs with everything from covered call strategies for passive-income seekers to smart-active ETFs for those looking to combat volatility without hurting returns. TD’s current ETF roster of 13, while limited compared to BMO’s, is a step in the right direction. As new ETFs continue flowing in, I’ll be sure to have a look under the hood of the most promising ones.
For TD Bank, a promising line-up of ETF products is an encouraging boon for the wealth management segment over the long term, as Canadians continue to gravitate from high-fee mutual funds toward lower-cost alternatives. While it may seem that the banks are just cannibalizing their higher-margin mutual fund businesses, over a longer time frame, I do see capital moving away from the non-bank wealth managers toward the banks thanks to the competitive advantages they possess, not to mention their deeper pockets.
While TD Bank has had equity and bond index ETFs in existence since 2016, only recently has the bank dabbled with more promising “smart active” ETFs such as the TD Systematic International Equity Low Volatility ETF (TSX:TILV) and the TD Active Global Enhanced Dividend ETF (TSX:TGED).
Both ETF options were released this year and offer intriguing an investment approach for a reasonable MERs (management expense ratios) of 0.35% and 0.65%, respectively.
Although the selection of such “smart active” ETFs is limited right now, one can’t help but wonder how many will be hitting the shelves over the next year and beyond as the demand for cheap DIY investment products continues to go on the uptrend.
For now, BMO has the advantage when it comes to ETFs, but I’d watch TD’s ETF line-up closely as more options become available. In any case, I’d have a close look at TD’s new ETF page and would also encourage investors to pick up the stock of TD Bank if they’re looking to play the bank’s growth potential in the space of wealth management. For now, it looks like the Canadian ETF throne is up for grabs.
Stay hungry. Stay Foolish.
