A brief history of ETFs in Canada

Exchange-traded funds (ETFs) have become an increasingly popular investment option since they were introduced. The world’s first ETF was launched in Canada on the Toronto Stock Exchange in 1990². Since then, the number of Canadian-listed ETFs has risen to over 2,000, with over $920 billion CAD invested¹.

ETFs are often viewed through the lens of “active” versus “passive” management because historically, ETFs were more focused on passive, index-based strategies. Early ETFs sought to replicate the performance of a particular benchmark, such as the S&P/TSX Composite Index or S&P 500 Index. They were popular with investors because of their low cost and easy diversification benefits.

In later years, actively managed ETFs became more popular with investors. Actively managed ETFs have their own dedicated portfolio management, similar to mutual funds. Because they are actively managed, they are typically more expensive than their passive ETF counterparts but often remain less expensive than mutual funds.

What is an ETF series?

A standalone ETF is structured as its own fund. It typically invests within a certain area of the market, or has a particular investment mandate, such as large-cap equities, investment-grade bonds, or specific industry sectors. A standalone ETF is created to operate in an exchange-traded format with its own trust and prospectus.

An ETF series, in contrast, is a class of an existing mutual fund that is listed on an exchange. The series provides ETF-like access to the same underlying portfolio and strategy as the mutual fund’s traditional series.

A standalone ETF is an independent product, while an ETF series is an additional access channel within a mutual fund structure. Both types of ETFs trade on exchanges and offer intraday liquidity, but ETF series share the same pool of assets and portfolio management as other mutual fund series.

How ETF series can help build portfolios for today

NEI’s ETF series offers access to NEI strategies, managers, and sub-advisors—through an exchange-traded structure. Whether building a portfolio from the ground up or simply adding diversification, ETF series provide new options for greater flexibility.

When might an ETF series be preferable to a mutual fund series?

For investors who value intraday trading flexibility, ETF series lets them buy and sell units on a stock exchange during market hours rather than transacting at the end of the day based on net asset value (NAV). This can appeal to those who want to time entry or exit points, react to market movements, or implement tactical allocation changes.

ETF series may also be preferable for investors who primarily operate through brokerage platforms, such as discount brokerages or full-service advisors with investment dealer licensing under the Canadian Investment Regulatory Organization (CIRO), where ETFs and other securities are managed within a single account. In these cases, ETF series can integrate more seamlessly into portfolio construction, without relying on mutual fund dealer systems.

For some investors or advisors, the priority is visibility into market pricing and trading activity, including bid-ask spreads and real-time valuations. Accordingly, an ETF series offers a more market-driven and execution-focused experience, making it a natural fit for investors accustomed to trading securities on an exchange.

Portfolio use cases

Tactical adjustments: ETF series can be used in portfolios in many of the same ways as traditional mutual fund series, but with added flexibility within brokerage-based environments. They are well-suited for tactical adjustments, allowing advisors or investors to quickly modify exposure to a strategy in response to changing market conditions.

Core building blocks: They can also serve as core portfolio-building blocks, particularly for advisors managing discretionary or model-based portfolios who want consistent exposure across multiple client accounts using exchange-traded instruments.

Cash flexibility: ETF series can also help when cash needs to be put to work quickly or when money is being moved from one investment to another, helping efficiently deploy or reallocate capital.

Who may find ETF series useful? ETF series are well suited for investors and advisors who operate within brokerage-based platforms, including discount brokerage clients and full-service advisors with securities licensing (CIRO investment dealer licensing).

They may also appeal to self-directed investors who prefer more control over trade timing and execution, as well as investors who are mindful of investment costs, investors looking for easier diversification, and investors who value the flexibility to buy or sell during the trading day. ETF series can also be attractive to model portfolio managers and discretionary advisors who manage portfolios centrally and require efficient, scalable implementation tools that work within trading systems .

When ETF series may not be right: ETF series may be less appropriate in situations where investors prioritize operational simplicity and convenience over trading flexibility. For example, investors who prefer automatic contributions, systematic purchases/redemptions, or dollar-cost averaging may find traditional mutual fund series more suitable, as these features are more seamlessly supported through mutual fund dealer platforms. They may also be less ideal for clients working with advisors or dealers who are limited to mutual fund transactions (e.g., CIRO mutual fund dealer channels), where access to exchange-traded products is not available

Additionally, ETF series may be less suitable for investors who are less familiar with market-based trading mechanics, including bid-ask spreads and order types, or who prefer certainty of pricing at NAV rather than transacting at a market price that may vary during the day.

Learn more about NEI ETF series and how they may offer investors another way to access NEI investment strategies with added flexibility.

NEI ETFs are managed by Northwest & Ethical Investments L.P. (NEI). Commissions, management fees and expenses all may be associated with investments in exchange-traded funds (ETFs). Please read the prospectus and ETF Facts before investing. ETFs are not guaranteed, their values change frequently, and past performance may not be repeated. ETF units are bought and sold at market price on a stock exchange and brokerage commissions will reduce returns. Index returns do not represent NEI ETF returns.

¹ETF.com,Canada's TIPs, World's First ETF, Celebrates 35th Year, March 10, 2025

²Canadian ETF Association, Canadian ETF Fact Sheet, September 1, 2026.