Royal Bank of Canada and BlackRock Inc. have decided to team up to try to dominate the market in Canada for exchange-traded funds.
Two of the firms’ subsidiaries, RBC Global Asset Management Inc. and BlackRock Asset Management Canada Ltd., announced on Tuesday a “strategic alliance” for their ETFs that will unite them under a single brand: RBC iShares.
“Around the world, iShares is known for the breadth of its ETF offerings, technology operating expertise, and investor education, while RBC Global Asset Management is the leader in Canadian mutual funds and has built a leading franchise developing innovative solutions,” said Martin Small, BlackRock’s head of U.S. and Canada iShares, in a release.
“Our aspiration is to champion a new standard for the Canadian ETF market by providing the best solutions and service and help grow the industry through innovative tools and technology for existing and new managers.”
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The alliance of the two firms, which will remain legally separate, will join the biggest ETF provider in Canada by market share (BlackRock) with the fifth-largest provider (RBC), according to the latest statistics from the Canadian ETF Association. It also catapults RBC past one of its competitors in the banking world, Bank of Montreal, whose asset-management division is second in ETF market share in Canada.
All told, the new suite of RBC iShares products includes around $60 billion in assets under management, as well as 150 ETFs, which the companies say they will offer through a “unified distribution support and service model.” Investors will access the RBC iShares ETFs through advisors, discount brokerages and robo-advisors, a release said.
There is no change to the names or ticker symbols for the existing ETFs, it added.
“Canadian investors deserve a level of choice, quality and cost competitiveness that is second to none – and that is what RBC iShares delivers,”said Damon Williams, CEO of RBC Global Asset Management, in the release. “This exciting step forward in the ETF space complements our continued focus on expanding our industry-leading Canadian mutual fund business.”
In concert with the move, RBC announced changes to some of its ETFs, such as around investment objectives, with some of the tweaks subject to approvals from unitholders and regulators, it said in another release.
RBC said the proposed moves would include merging some existing RBC ETFs with iShares ETFs and terminating the RBC Emerging Markets Equity Index ETF fund completely.
“The proposed changes will streamline and simplify the RBC iShares solution suite, and will result in tangible benefits to unitholders of the RBC Index ETFs including greater liquidity associated with the larger iShares ETFs and historically more favorable spreads on the secondary market, which will ultimately reduce transactional costs for investors,” RBC said in a release.