Global investment giant Allianz is stepping into the Canadian fixed-income ETF market.
With US$612-billion in assets, Allianz Global Investors will be subadvising the Evolve Active Global Fixed Income ETF. Evolve Funds Group Inc. filed a preliminary prospectus for the fund on Friday. Under the ticker EARN, and with a management fee of 0.65 per cent, the fund will invest primarily in global bonds of corporate issuers.
Allianz Global Investors is a subsidiary of Allianz SE, a Munich-based issuer who manages approximately US$2.2-trillion in assets. It is also the parent firm of Pacific Investment Management Co. LLC (Pimco).
“The opportunity to expand our presence in the Canadian market through this partnership with Evolve ETFs feels both well-timed and well-matched,” David Newman, head of global high yield at Allianz Global Investors said in a statement. “While Evolve has deep knowledge of the Canadian ETF market that we have been looking to break into, AllianzGI brings decades of experience across credit markets, and a team that has been a pioneer of global fixed income."
Last year, 40 per cent of all Canadian fixed income ETF inflows were into active ETFs as fixed income securities continue to be a core component of investor portfolios. Last month, the Canadian ETF market hit $163-billion in assets under management with net inflows of $716-million – of which $652-million went directly into fixed income funds.
Allianz Global Investors manages US$36-billion in global fixed income (as of June 30).
EARN will be the first Canadian product the asset manager has chosen to subadvise, and will aim to generate positive returns throughout interest rate and economic cycles by allocating to different credit asset classes and also through bottom-up individual security selection.
Rival asset manager Pimco Canada Corp. entered the ETF market last year, launching two actively managed bond exchange-traded fund series. It is already the 10th largest Canadian ETF provider with $761-million in assets.
Despite Pimco and Allianz Global Investors both being owned by Allianz SE, the two sister companies operate as direct competitors in the fixed income space, steering Allianz to set up a partnership with a Canadian competitor.