Things are heating up in the efforts by exchange-trade fund companies in Canada to steal assets away from traditional asset allocation mutual funds.

Barclays Global Investors Canada introduced Tuesday its first asset allocation ETFs of ETFs for Canadian investors. The move coincided with BGI's  introduction of its first target date funds for the U.S. market. And earlier this week, BGI's Canadian ETF rival, Claymore Investments, lowered fees on its asset allocation ETFs of ETFs.

Claymore markets its CorePortfolios as the first Canadian asset allocation funds to be offered in the ETF format (they were actually the first such funds launched in the world, the company maintains).

Now it has serious competition from BGI, the largest ETF company in Canada, and globally. What's more, there are dozens of asset allocation funds in Canada using traditional mutual funds, which both ETF companies are trying to chip away at in terms of market share as the sector becomes more popular.

The Canadian iShares Portfolio Builders Funds include Conservative Core Portfolio Builder (TSX: XCR); Growth Core Portfolio Builder (TSX: XGR); Global Completion Portfolio Builder (TSX: XGC); Alternatives Completion Portfolio Builder (TSX: XAL) XCR and XGR charge a management fee of 60 basis points. XGC and XAL charge a fee of 70 basis points.

Claymore, the Canadian ETF affiliate of Claymore Securities, has cut the fees on its asset allocation ETFs from 70 basis points to 25 basis points. Claymore previously had rebated the fees of the underlying ETFs, a rebate program now eliminated. What that means is that the resulting fees on the funds now include the underlying ETF fees, but total fees still come in a little lower than the previous 70 basis points, and in line with BGI's fees.

Som Seif, CEO of Claymore, told IndexUniverse.com that the main reason for the fee reduction is not competition from BGI, but from the wide range of active asset allocation mutual funds that use ETFs and charge 1%, in addition to charging the underlying ETF fees.

Claymore's rebate program was not as obvious a way to show its lower fees relative to those asset allocation mutual funds than the new flat fee. The Claymore Balanced Income CorePortfolio ETF (TSX: CBD) and Claymore Balanced Growth CorePortfolio ETF (TSX: CBN) now have fees of 60 basis points and 65 basis points, respectively, including all of the underlying ETF fees.