Lessons from Canada’s ETF Graveyard

Canada now has nearly 2,000 ETFs trading — but history shows that not all of them last. Over the past two decades, 654 Canadian ETFs have closed, roughly one for every four launches. And for planners, how they close matters.

About 70% were liquidated, not merged. In taxable accounts, that can mean unexpected capital gains, forced reinvestment decisions and added client friction — all triggered outside the planner’s control.

A review of Canada’s ETF “graveyard” highlights several patterns worth keeping in mind:

  • Size matters: ~80% of closed ETFs had less than $10 million in assets. Scale isn’t everything, but small funds face real economic headwinds.
  • Low fees aren’t enough: About 30% of closed ETFs were “low cost.” Thin margins plus weak asset growth don’t make for long-term survival.
  • The first five years are critical: Nearly 60% of ETFs closed within two to five years, suggesting early traction (or lack of it) is a strong signal.
  • Passive doesn’t mean durable: Roughly half of closures were passive, with strategic beta ETFs overrepresented. These factor bets don’t adapt when market regimes change.

The broader lesson for planners: ETF failures usually aren’t about bad ideas — they’re about economics catching up. Fees matter, but so do scale, competition and time in market.

In a space crowded with innovation and choice, there’s value in prioritizing durability over novelty — and favouring ETFs that have already proven they can go the distance.

Read the full Globe & Mail article:
Four lessons from the Canadian ETF graveyard
https://www.theglobeandmail.com/investing/investment-ideas/number-cruncher/article-etf-graveyard-lessons-investing-advice-markets/