The line between mutual funds and exchange-traded funds (ETFs) is blurring. And it can't be more evident than in the three AlphaPro actively managed ETFs listed Wednesday on the Toronto Stock Exchange.
Vito Maida, Stephen Rogers and Lyle Stein were once among recognizable names among managers in the Canadian retail mutual fund world - particularly during the heyday of the 1990s.
Now, they are embracing the ETF world as stockpickers for actively managed ETFs run by AlphaPro Management Inc., a unit of Jovian Capital Corp.
Mr. Maida, who will pick stocks for HAP North American Value ETF , is the founder of investment counselling firm Patient Capital Management Inc. that caters to institutional and wealthy clients. In 1999, he left Trimark Financial Corp. where he ran the giant Canadian stock funds.
Mr. Rogers, who will pick stocks for HAP North American Growth ETF , more recently ran Mavrix North American Growth for Mavrix Fund Management Inc. But he is better remembered as a manager for AGF Management Ltd. where he ran AGF American Growth Class.
And Mr. Stein, who will oversee the stock picks for HAP Dividend ETF , became chief executive officer of Leon Frazer & Associates Inc. last year. More recently, he was a founder and CEO of Red Barn Capital Inc. He was a portfolio manager at Sceptre Investment Counsel Ltd. where he also ran Sceptre Balanced Fund.
While these ETFs charge a management expense ratio of 0.70 per cent - a nice change from mutual funds - only time will tell whether it is better to buy these actively managed ETFs than low-fee index ETFs.
The performance of the HAP Managed S&P/TSX 60 ETF , whose stocks were chosen over the past year by technical analyst Ron Meisels, president of Phase & Cycles Inc., indicates that it is not so easy to beat a benchmark index.
This active ETF gained 6.6 per cent for the year ended Jan. 31 compared with 27 per cent for the iShares CDN LargeCap 60 ETF and 24 per cent for the benchmark S&P/TSX 60 Index.
Last week, AlphaPro announced that Front Street Investment Management Inc. would take over that ETF from Mr.Meisels.
Frank Mersch, a founder of Front Street and a former high-profile manager with Altamira Investment Services Inc. (which was bought by National Bank) and Prakash Hariharan, will now pick stocks for HAP Managed S&P/TSX 60 ETF.
Maybe they will have better luck beating the index.