Investment manager Hamilton Capital Partners is the newest exchange-traded funds provider to join the Canadian ETF industry with two products set to launch this quarter – adding to an already busy launch season for the ETF market.
The Toronto-based firm, which specializes in global financial services for Canadian investors, is set to launch two ETFs, making it the 13th provider in the Canadian ETF industry. Both the Hamilton Capital Global Bank ETF and the Hamilton Capital Global Financials Yield ETF have a preliminary prospectus filed and will be open to investors upon approval.
Both funds will be actively managed ETFs, with a management fee of 0.85 per cent. The Global Bank ETF is composed primarily of equity securities of banks and other deposit-taking institutions located anywhere around the globe. The ETF's portfolio is anticipated to include approximately 40 to 60 banks and similar institutions, with a geographic split of roughly: 50 per cent U.S. and Canada; 25 per cent Europe; and 25 per cent other countries. The Global Financials Yield ETF will invest primarily in equity securities of a broad range of global financial services companies.
The firm is among several other small ETF players who entered during a time when large mutual-fund players are starting to show interest. Last year, Auspice Capital and Lysander Funds introduced ETFs based on specific offerings of commodities and preferred shares, respectively.
"The raft of new providers will certainly help overall ETF asset growth," says Daniel Straus, an ETF research analyst with National Bank Financial. "Large fund companies are introducing ETFs to meet an unmet need within their own distribution networks while a growing number of boutique firms are launching niche strategies that fall under their particular area of expertise," he said. He sees all providers benefiting from the "rising investor demand for transparency and cost effectiveness."
The industry already has a number of new product offerings in the pipeline for 2016, with 22 filings from both new and existing ETF providers, according to a recent National Bank Financial ETF report.
"The number of new providers and new products that we are seeing continues to validate the ETF structure," says Atul Tiwari, head of the Canadian ETF Association. "As Canadians continue to become more aware of the negative impact of high fees on their long term net returns and regulators mandate greater fee disclosure, we will continue to see new ETF entrants and more product choice in the space."
Below is a rundown of what to expect in ETF offerings that have launched or are expected to launch in the first quarter.
ETF 2016 launches
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