The bank and listed asset management house are joining forces to manage and distribute exchange traded funds in the Canada market, with collective assets under management of around $60 billion.

Royal Bank of Canada and BlackRock are teaming up to deliver exchange traded funds to the Canadian marketplace, a sign of how the business of such low-cost funds is becoming increasingly competitive.

The “strategic alliance” will see ETFs offered in Canada by BlackRock and RBC Global Asset Management brought together under a single roof – RBC iShares. (iShares is the ETF brand of BlackRock, and the largest such ETF name in the industry.)

The combined ETF business holds $60 billion of assets, making it the largest of its kind in Canada. The suite includes a total of 150 ETFs. The total Canada-listed ETF market is worth $121 billion (data as of end-November, according to ETFGI, a research house).

"This alliance is a win for Canadian investors and reflects our unwavering focus on the interests of clients," Damon Williams, CEO of RBC Global Asset Management, said.

The ETF industry has boomed in recent years on the back of rising equities – even continuing to do so for most of last year, when equities stumbled. Regulatory changes and investor annoyance at paying higher fees for actively-run funds that sometimes only track a benchmark have encouraged shifts to low-cost entities such as ETFs. 

The two firms, which remain separate legal entities, said that they will offer a unified distribution support and service model for investors and advisors. Specialized services will also be provided to third-party discretionary portfolio managers, advisors and institutions, including capital markets support, portfolio construction resources, and dedicated ETF strategists.

There is no change to the names or ticker symbols of RBC ETFs or BlackRock Canada's iShares ETFs as a result of the alliance.

Other changes
RBC GAM has also changed a number of its own index ETFs and mutual funds, as part of efforts to capture economies of scale and make its product range simpler. In some cases, fees for funds will be cut; changes are subject to regulatory and unitholder consent.

In the 12 months to end-November 2018, the Canadian ETF industry’s assets under management expanded by 3.5 per cent. On a 10-year basis, the sector has chalked up a compound annual growth rate of 20.5 per cent.

BlackRock, a dominant business in the ETF space, had a total of $6.4 trillion of assets under management across all its businesses as at the end of September last year.