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ETFS passive activate


Alain Thériault

13 March 2018 13:30

Bernard Letendre

The face of the ETFS has changed. While the market was essentially composed of index funds canadian equities, ETFS focused on u.s. equities and international have experienced strong growth, as well as those focused on bonds.

This is what reports the bulletin of August 2017 of the Canadian ETF Association (CETFA). In addition, investors will be looking for a more active, including managers who avoid keeping just the index.

A method based on its own rules

On its website, Franklin Templeton Investments explains the operation of two of its ETF beta smart launched in June 2017 : ETF us equity Franklin LibertyQT and ETF international equity Franklin LibertyQT. The manager uses an investment approach based on its own rules. Basically, its two funds beta smart seek to exceed the return of the index by weighting the titles roughly equally, rather than according to their market capitalisation.

New index fund multi-factor

Several new suppliers have relied on the fad of the indices most active. For example, Desjardins global asset Management and Investment Manulife have in turn launched in April, of the index fund multi-factorial. The analysis factor is based on the analysis of the factors that generate the expected returns are higher, as the size of the company, the relative price and profitability, according to Manulife.

«Our basic strategy is to identify managers to be exceptional and offer value-added products to investors,» says Bernard Letendre, president, Manulife Investments.

For his part, Desjardins said select canadian equities that exhibit characteristics associated with the six factors of long-term performance » documented.» The approach enables to decrease the risk of advance relative to that of the benchmark index, and to mitigate losses in periods of contraction, as well as participate in the increase at times.

Invesco and BMO also present

Sixth player of the market of the ETF with its PowerShares emerging in 2009, Invesco is focusing on indices smart since the beginning, and now more than ever to distinguish themselves.

«We focus on indices smart. It is a small market, but growing. We bought Guggenheim in the United States, which handle a volume of 36.7 G$ with an approach of equal weight (equal-weight) : you take the S&P500 index and you give it a weighting of 1/500th to each title, » said Alain Huard, vice-president and regional sales director of Invesco Canada.

The presence of long-standing

BMO also stresses its long-standing presence in the niche of the ETF smart. «We believe a lot in the indices to manage active and beta wise. From the beginning, there has been a desire to create a range of solutions for ETF innovative, both in the index as of the next beta smart. The BMO ETF currently hold more than 50 % of the market share in the sectors of the ETF beta wise and active management in Canada, » said Alain Desbiens, vice-president of sales for the region of eastern canada , BMO global asset Management Canada.

Mr. Desbiens said observe that more and more advisors integrate strategies index and beta wise in their portfolios. «These ETFS allow them to provide their clients with funds that focus on factors that identify securities with low volatility and of quality, he argues. They focus on factors of dividends or options, which provide an income that is optimized and efficient for tax purposes. «

Strategic Insight confirms

Strategic Insight is echoed in the trend. «Among the six new suppliers have arrived in 2017, on July 31, a single offer of the ETFS, index-based passive management. The other five bids are beta funds intelligent or actively managed. On the 67 new ETFS launched during this period, 46 provide a strategy beta or active management, » says Megan Cobb, his analyst and is an expert in exchange-traded funds.

She adds that the new policies are strongly oriented towards equity funds. «Some have strategies of derivatives such as options, purchase or sale of shares. The fund beta smart a special focus on securities that pay generous dividends. «

These new players are seeking to differentiate itself from iShares and other former players firmly established, who have already launched a crowd ETFS and traditional index. «They are finding new ways and new styles of management, which add value to passive management,» says Ms. Cobb.

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