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etfs

Competition remains fierce in the Canadian exchange-traded fund industry. As two new ETF providers enter the market, two others announce their exits. The new market players introduced suites of innovation-focused ETFs and alternative funds.

Emerge Canada Inc. launched five actively managed thematic ETFs on NEO Exchange. They focus on innovative sectors including genomics and biotech, autonomous tech and robotics, AI and big data, and fintech. The suite will be subadvised by ARK Investment Management LLC, a New York-based firm specializing in disruptive innovation. ARK Investment Management is an award-winning ETF issuer that attracted more than US$2.8-billion in ETF assets under management. Each of Emerge’s ETFs comes in two different classes, Canadian dollar units (shown in the accompanying table – EARK, for example) and U.S. dollar units (EARK.U).

Another provider joined the market in July. Picton Mahoney Asset Management, a Toronto-based hedge fund manager, introduced exchange-traded class of units for its entire Fortified Alternative Fund family. The suite comprises alternative funds that invest in long and short positions in equities, derivatives, securities of investment funds, fixed income securities and/or cash and cash equivalents. In addition to management fees of 0.95 per cent, each Fortified ETF also charges outperformance fees tied to certain benchmarks.

Increased competition and the expanding product range make it difficult for small issuers to survive. For example, Coin Capital Investment Management Inc. announced that it will be terminating the Coincapital STOXX B.R.AI.N. Index Fund (THNK) and the Coincapital STOXX Blockchain Patents Innovation Index Fund (LDGR), thereby exiting the ETF industry, effective on or about Aug. 29.

First Block Capital Inc. is exiting the market by closing its only ETF, the FBC Distributed Ledger Technology Adopters ETF (FBCN), effective on or about Sept. 17. The blockchain ETF was up against similar ETFs from Horizons ETFs, First Trust Portfolios Canada and Harvest Portfolios Group.

Among the well-established fund providers, BMO Asset Management Inc. announced the termination of three ETFs: the BMO Global Banks Hedged to CAD Index ETF (BANK), the BMO Global Insurance Hedged to CAD Index ETF (INSR) and the BMO Shiller Select US Index ETF (ZEUS), effective on or about Nov. 1. Each of these ETFs has not attracted significant assets – less than $20-million in assets under management since their inception back in 2017.

July ETF launches

TICKERNAMEASSET CLASSINCEPTION DATEMGT. FEEEXCHANGE
EARK-TEmerge ARK Global Disruptive Innovation ETFEquity7/29/20190.80%NEO
EARK.U-TEmerge ARK Global Disruptive Innovation ETFEquity7/29/20190.80%NEO
EAGB-TEmerge ARK Genomics & Biotech ETFEquity7/29/20190.80%NEO
EAGB.U-TEmerge ARK Genomics & Biotech ETFEquity7/29/20190.80%NEO
EAFT-TEmerge ARK Fintech Innovation ETFEquity7/29/20190.80%NEO
EAFT.U-TEmerge ARK Fintech Innovation ETFEquity7/29/20190.80%NEO
EAAI-TEmerge ARK AI & Big Data ETFEquity7/29/20190.80%NEO
EAAI.U-TEmerge ARK AI & Big Data ETFEquity7/29/20190.80%NEO
EAUT-TEmerge ARK Autonomous Tech & Robotics ETFEquity7/29/20190.80%NEO
EAUT.U-TEmerge ARK Autonomous Tech & Robotics ETFEquity7/29/20190.80%NEO
QEBH-TMackenzie Emerging Markets Bond Index ETF (CAD-Hedged)Fixed Income7/25/20190.45%TSX
PFIA-TPicton Mahoney Fortified Income Alternative FundAlternative7/16/20190.95%*TSX
PFMN-TPicton Mahoney Fortified Market Neutral Alternative FundAlternative7/16/20190.95%*TSX
PFMS-TPicton Mahoney Fortified Multi-Strategy Alternative FundAlternative7/16/20190.95%*TSX
PFAE-TPicton Mahoney Fortified Active Extension Alternative FundAlternative7/16/20190.95%**TSX

Source: Inovestor

*Quarterly performance fee equal to 20% of the outperformance over the high water mark less the hurdle amount on valuation date. **Quarterly performance fee equal to 20% of the outperformance over the S&P/TSX Composite Index (TR) on valuation date

July ETF terminations

TICKERNAMEASSET CLASSTERMINATION DATEAUMMGT. FEE
THNK-TCoincapital STOXX B.R.AI.N. Index FundEquity8/29/2019$0.478 M0.64%
LDGR-TCoincapital STOXX Blockchain Patents Innovation Index FundEquity8/29/2019$0.506 M0.64%
FBCN-TFBC Distributed Ledger Technology Adopters ETFEquity9/17/2019$1.1 M0.75%
BANK-TBMO Global Banks Hedged to CAD Index ETFEquity11/1/2019$8.15 M0.35%
INSR-TBMO Global Insurance Hedged to CAD Index ETFEquity11/1/2019$12.18 M0.35%
ZEUS-TBMO Shiller Select US Index ETFEquity11/1/2019$16.06 M0.65%

Source: Inovestor

Kimberly Yip Woon Sun is an ETF analyst at Inovestor Inc.

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