Canadian investors are increasingly favoring exchange-traded funds (ETFs) over mutual funds, despite ongoing global market turbulence fueled by the U.S.-led trade war. According to a recent CIBC report, net sales of ETFs are surpassing those of mutual funds, particularly among retail investors. While mutual funds still dominate Canadian portfolios, ETFs have expanded three times faster over the past five years, driven by lower costs and greater intraday trading flexibility.
ETF assets hit a record $518 billion in 2024, growing nearly sevenfold in a decade, with retail investors playing a major role in this surge by opting to self-manage portfolios instead of paying financial advisors. However, concerns remain over rising risks, especially as some retail investors use leverage to buy ETFs, prompting measures like mandatory training in South Korea.
Vanguard Canada’s S&P 500 ETF, VFV, demonstrated strong returns before experiencing losses in 2025 amid tariff-driven market swings. Experts highlight ETFs’ liquidity benefits in volatile markets but warn that inexperienced investors may struggle to navigate complex choices, potentially leading to disappointing outcomes.
The rise of automated trading tools and game-like investing behavior has accelerated retail participation, with an 83% increase in automated trades reported in April 2025. Financial analysts caution that impulsive reactions to market fluctuations can hurt retail investors, particularly during volatile periods when ETF liquidity and pricing may diverge.
Swifteradio.com
