ETF Of The Week: $750M To New Canada Fund 

August 17, 2018

Welcome to ETF Of The Week, a designation given to the most newsworthy or notable fund of the past seven days.

Nothing particularly remarkable happened in Canadian equities this week that would cause the JPMorgan BetaBuilders Canada ETF (BBCA) to land in our “ETF of the Week” spot. And yet here we are.

BBCA made headlines this week following one-day net asset inflows of more than $750 million. That’s a 300%-plus jump in total assets in a single  day for a fund that came to market less than two weeks ago.

If this feels a little bit like deja vu, it’s because it is. The creations most likely came from BBCA’s own issuer, J.P. Morgan, which has been pulling money from competing ETFs and pouring it into its new-to-market proprietary funds in an aggressive move to grow its ETF business.

Earlier this summer, we saw this same story play out when the JPMorgan BetaBuilders Japan ETF (BBJP) became the second-fastest ETF to reach $1 billion in assets thanks largely to J. P. Morgan’s asset-pull from the competing iShares MSCI Japan ETF (EWJ)—money that landed into BBJP.

As ETF.com’s Managing Director Dave Nadig put it, “this is an industry lesson on how to build an ETF from the ground up.” In J.P. Morgan’s case, ETF asset growth has come by leveraging its own institution.

BBCA’s asset infusion is most likely coming from the $2.9 billion iShares MSCI Canada ETF (EWC), a 22-year-old veteran fund in which J.P. Morgan is a lead investor.

Almost Identical

Both BBCA and EWC are index-tracking strategies that focus on Canada’s large- and midcap stocks, the first with a portfolio comprising 94 holdings, the latter investing in 93 stocks. The portfolios, both largely excluding small-cap stocks, are nearly identical.

Look at a comparison of each ETF’s top holdings: 

 

For a larger view, please click on the image above.

 

Sources: ETF.com, FactSet data

For a larger view, please click on the image above.

 

One big difference is that BBCA, tied to a Morningstar benchmark, is far cheaper, costing only 0.19% in expense ratio. That’s less than half of EWC’s price tag of 0.49%, or $19 per $10,000 invested versus $49 per $10,000 invested.

BBCA is one of eight ETFs on the market focused on Canada, and now the second largest by assets. The fund is part of J.P. Morgan's BetaBuilders lineup of five funds known for their low-cost market-cap-weighted approaches.

J.P. Morgan, which really began pushing into the ETF market in 2016—aside from the 2009 listing of the J.P. Morgan Alerian MLP Index ETN (AMJ)—today has some 29 ETFs with more than $11 billion in combined assets.

Contact Cinthia Murphy at [email protected]

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