Mackenzie Investments is set to enter the Canadian exchange-traded fund industry with four actively managed fixed income products.
Mackenzie is ready to release its ETF lineup later this year, according to a National Bank Financial report released on Tuesday. The funds will include Mackenzie Core Plus Canadian Fixed Income ETF (MKB), Mackenzie Core Plus Global Fixed Income ETF (MGB), Mackenzie Floating Rate Income ETF (MFT) and Mackenzie Unconstrained Bond ETF (MUB). The management fees for the funds are expected to range from 0.55 per cent to 0.65 per cent and the funds will be actively managed.
Last April, the fund company appointed Michael Cooke as senior vice-president, head of alternative products for Mackenzie Investments, a newly created position to consider products that could include hedge funds, liquid alternatives and exchange-traded funds. Mr. Cooke was former head of distribution of Invesco Canada Ltd.'s ETF division, PowerShares Canada.
During the exploratory phase last year, Mackenzie CEO Jeff Carney told The Globe and Mail in an interview the company would not consider offering traditional ETFs, but only look at products using active management.
The Mackenzie ETF products are only a handful of new funds expected to launch later this year. Already in 2016 there have been 31 newly filed ETFs from eight separate providers in Canada, including three new names on the roster – Mackenzie, TD Asset Management and Sphere Investment Management, according to National Bank Financial.
TD Asset Management announced late last year its plans to re-enter the market. It has six ETFs coming in 2016 – with management fees ranging from 0.07 per cent to 0.18 per cent. Sphere will be joining the existing 13 ETF firms in Canada – which have combined total assets of $88.5-billion as of Feb. 29.
Despite the number of providers and products coming down the pipeline, there is still more room for growth in Canada, says Daniel Straus, research analyst with NBF.
"When we look at the U.S. – which scales about 10 times the size – and their $2-trillion in assets under management in the ETF industry, we have the room – potentially – to have $200-billion in AUM for the Canadian ETF market," Mr. Straus says.
In terms of the number of providers hitting the market, Mr. Straus says other mutual fund providers could already be planning to enter the ETF space. Potential players could be Manulife Financial – its U.S. division, John Hancock, launched ETFs in the United States – and AGF Management Ltd., which acquired FFCM LLC, a Boston-based ETF adviser last fall.
Unlike the bigger mutual fund players, Sphere Investments is a newly formed company founded by Lewis Bateman, who previously held positions at ETF providers First Asset and Horizons ETFs Management (Canada) Inc. While the firm is still waiting for regulatory approval, it is in the process of launching nine funds that will track the FTSE Sustainable Yield Index series.
The funds will invest in 150 dividend-paying companies in its respective region and include Canadian and U.S. dollar-denominated versions. The offerings will include: Sphere FTSE Asia Sustainable Yield Index ETF (SHA), Sphere FTSE Canada Sustainable Yield Index ETF (SHC), Sphere FTSE Emerging Markets Sustainable Yield Index ETF (SHZ), Sphere FTSE Europe Sustainable Yield Index ETF (SHE), and Sphere FTSE US Sustainable Yield Index ETF (SHU). Management fees are expected to be 0.54 per cent for all funds.
At the same time, existing ETF players in the market are busy with launch plans for 2016.
Horizons ETFs filed for three derivative-based ETFs while iShares is expanding its 'Edge" fund family. First Asset, which was recently purchased by mutual fund giant CI Financial, plans to add to its corporate class fund lineup and Invesco PowerShares will launch a global momentum ETF.