Two Technology ETFs Introduced to the Canadian Market

Last month, two technology ETFs were added to the Canadian product line-up while Horizons announced the termination of two of its volatility ETFs. Redwood Asset Management will be amalgamated into Purpose Investments, its parent company.  Purpose Investments is bringing all of its products under a single banner, the Purpose brand, and will therefore retire the Redwood brand. Purpose acquired Redwood Asset Management in July 2016 and it operated as a separate entity under its own brand up to now. The rebranding process entails the amalgamation of the two companies, the mergers of Redwood funds with Purpose funds and ETFs, funds name and ticker changes and the conversion of closed-end funds to ETFs.

Another big bank is set to join the ETF industry during the year. Scotiabank filed a preliminary prospectus to launch its first suite of ETFs. The ETFs will invest in one or more ETFs, in accordance with their respective investment objectives. The move to the ETF market came as no surprise, considering the success of other big banks. For instance, BMO Asset Management is the second largest ETF provider in Canada with AUM of over $48-billion. In 2017, its net creations accounted for approximately 40% of the industry’s total net inflows, according to reports from CETFA. More recently, BMO announced that it is exploring actively managed ETFs.


Source: Inovestor Inc.

Evolve Funds launched the Evolve Innovation Index ETF (“EDGE”), which tracks the Solactive Global Innovation Index. The index covers the following sub-sectors: Robotics and Automation, Future Cars, Cyber Security, Bid Data and Cloud Computing, Genomics and Social Media. BMO introduced Canada’s first ETF to provide exposure to new media and technology companies. The BMO Global Communications Index ETF (“COMM”) seeks to replicate the Solactive Media and Communications Index.

Horizons announced the closure of two volatility-focused ETFs. The two ETFs are speculative investment tools that provide leveraged and inverse exposure to the S&P 500 VIX Short-Term Futures. In early February, due to dramatic increase in volatility, the BetaPro S&P 500 VIX Short-Term Futures Daily Inverse ETF (“HVI”) lost approximately 88% of their NAV in a matter of days. In Horizons’ view, the rise in volatility significantly changed the risk profile of these two ETFs, deemed too high for Canadian investors.