AMALGAMATIONS AND NEW ETF LAUNCHES
The surge of exchange-traded funds continues. Assets under management stood at $141-billion at the end of October, driven by strong net inflows. Evolve Funds announced that it will take over the ETF management contracts from Sphere Investment Management Inc. Amalgamations are to be predicted as the market gets progressively crowded. For instance, eight ETF sponsors joined the industry this year.
Evolve Funds entered into an agreement with Sphere to acquire the right to manage Sphere’s five ETFs with approximately $68-million in assets under management, subject to obtaining unitholder and regulatory approvals. Sphere’s ETFs are expected to continue to use a strategy that follows the Sustainable Yield Indices.
OCTOBER ETF LAUNCHES :
The Canadian product shelf is expanding and it is slowly deviating from the core, which was inherent in the rapid growth of the passive industry. 16 new ETFs were issued this month from RBC, BMO, Evolve Funds and Horizons.
BMO introduced five new ETFs. The BMO High Yield US Corporate Bond Index ETF (“ZJK”), started trading at the beginning of October and already attracted $1.18-billion in assets. It tracks the performance of the Bloomberg Barclays Capital U.S. High Yield Very Liquid Index. The ETF is also offered in CAD-hedged units under ZHY. The management fee on both ZJK and ZHY are 0.55% of NAV. BlackRock’s iShares U.S. High Yield Fixed Income Index ETF (“CHB”) tracks the same benchmark and charges only 50 basis points.
Horizons launched the Horizons Active A.I. Global Equity ETF (“MIND”), the World’s first global equity-focused ETF entirely run by a proprietary and adaptive artificial intelligence system. MIND seeks long-term equity returns through investments in major global equity indices using primarily North American-listed ETFs. “MIND is expected to be able to more efficiently process market data and allocate assets than any human manager,” said Steve Hawkins, President and co-CEO of Horizons ETFs. “Unlike today’s portfolio managers who may be susceptible to investor biases such as overconfidence or cognitive dissonance, MIND is devoid of all emotion. It is purely systematic in how it makes investment decisions.” Horizons has more ETFs in its pipeline.
On November 14th, Horizons ETFs Management (Canada) Inc. will launch its first multi-factor ETF, the Horizons Inovestor Canadian Equity Index ETF (“INOC“), sub-advised by Inovestor Asset Management. INOC seeks to replicate, to the extent possible, the performance of the Nasdaq Inovestor Canada Index (“NQICA“). The ETF charges a management fee of 0.50% of net asset value.
The Nasdaq Inovestor Canada Index was designed by Inovestor Inc., an affiliate of the sub-advisor. It uses a quantitative bottom-up model that systematically identifies companies with high levels of economic profit and attractive valuations ranked according to multiple factors, namely; profitability, growth, safety, management quality, reasonable valuations, and shareholders yield. The strategy has outperformed the S&P/TSX (TR) by 7.4% on average since 2008.
“This ETF is the result of our R&D on economic profit factors over the last decade and we selected industry leaders to increase our odds of succeeding with this investable product,” says Francois Soto, Vice-president, Portfolio Management at Inovestor Asset Management. For more information about INOC, please visit their website