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What are we looking for?

Actively managed ETFs with long-tenured portfolio managers

The screen

One big benefit accompanying the explosion of actively managed ETFs in Canada is that DIY investors have access to professional money managers, where previously we were limited to following a traditional index. Moreover, access to these managers via ETFs often comes at a lower cost than their mutual fund equivalents – and without a bundled advice fee in the case of a series mutual funds (especially beneficial to investors who have small amounts to invest and are willing to do a bit of their own research). Long-tenured managers bring with them the experience to navigate through multiple market cycles and are more likely to follow a consistent investment strategy for the funds they manage, especially if they are successful. Today, we seek to find Canadian-domiciled active ETFs that have long-tenured managers and have outperformed their peers over time. To conduct this search, I used Morningstar Direct to screen for ETFs that

  • are actively managed, as indicated in prospectus filings;
  • have received a Morningstar Rating for Funds (informally known as the “star” rating) of four or five stars. This rating is an objective look back at the risk-adjusted after-fee performance of the fund, relative to its category peers. The rating considers the last 10 years of performance history, if available, and puts greater emphasis on recent performance history. Our data shows that although the star ratings are backward-looking, funds that have received five stars as a group outperform those that have received four stars, three stars, etc. after receiving the rating. In other words, it’s more likely that a fund manager with a track record of outperforming peers will continue to outperform in the future.

I then sorted this list based on the average tenure of the portfolio management team and displayed those who have an average tenure of more than 10 years (coinciding with the performance history used to derive the Morningstar Rating for Funds.

What we found

Actively managed ETFs with strong ratings

NameTickerMER (%)Morningstar CategoryMorningstar Rating for FundsTotal Ret YTD (%)Total Ret 1 Yr (%)Total Ret Annlzd 3 Yr (%)Total Ret Annlzd 5 Yr (%)Total Ret Annlzd 10 Yr (%)Total Ret Annlzd 15 Yr (%)Inception DateAverage Manager Tenure (Years)Longest Manager Tenure (Years)Manager Name(s)
CI Canadian REIT ETFRIT-T0.87Real Estate Equity★★★★0.3- Goldman
Franklin Bissett Core Plus Bond ETFFLCP-T0.62Canadian Fixed Income★★★★-1.32.9-2.36/27/201915.937.5Thomas O'Gorman;Darcy Briggs;Adrienne Young;
PIMCO Monthly Income ETFPMIF-T0.84Multi-Sector Fixed Income★★★★★ T. Murata;Daniel J. Ivascyn;Joshua Anderson;
Franklin Bissett Short Duration Bd ETFFLSD0.34Canadian Short Term Fixed Income★★★★ Briggs;Adrienne Young;
CI CanadianConvertBd ETFCommCXF-T0.71Canadian Corporate Fixed Income★★★★★ Goldman
IA Clarington Strategic Income ETFISIF-T0.97Canadian Neutral Balanced★★★★ Bastasic
Purpose Strategic Yield ETFSYLD-T0.91High Yield Fixed Income★★★★★ Liang
Russell Investments Global Infras ETFRIIN-T1.08Global Infrastructure Equity★★★★-1.8-1.25.61/22/202011.111.1Greg Nott

Source: Morningstar Research Inc. | Data as of February 6, 2024

The funds that qualified in the screen are listed in the table accompanying this article, alongside their categories, tickers, MERs, performance, inception dates, ratings and manager names, as well as average tenure and longest tenures. It is vital that investors first consider the category to which each ETF belongs, given that the ratings are designed to illustrate outperformance to this specific peer group of funds. Readers might also notice that in some cases the tenure of managers exceeds the history of the ETF. This is largely because the same underlying strategy and portfolio offered via other investment vehicles were later offered as ETFs.

This list is not meant to be exhaustive in that it tracks managers who have remained on the funds they currently manage. The industry often sees managers move from one fund manufacturer to another, bringing along their experience. This deeper history across products and manufacturers is a core consideration in the Morningstar Medalist Rating (not used in today’s screen), which is a qualitative assessment of a fund’s ability to outperform peers on an after-fee basis in the future.

This article does not constitute financial advice. It is always recommended to conduct one’s own independent research before buying or selling any of the funds or ETFs mentioned in this article.

Ian Tam, CFA, is director of investment research for Morningstar Canada.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 08/02/24 11:59pm EST.

SymbolName% changeLast
CI Canadian REIT ETF
Franklin Liberty Core Plus Bond ETF
Pimco Monthly Income Fund
CI CDN Convert Bond ETF
Purpose Strategic Yield Fund
IA Claringtion Strategic Income Fund ETF
Russell Invt Global Infr Pool ETF

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