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etfs

Canadian exchange-traded funds added $2.6 billion in October, once again led by cash alternative ETFs. Equity ETFs welcomed $676 million of inflows, the majority of which belonged to U.S. broad market equity. Among the sector equity ETFs, Technology, Utilities and Materials sectors had net inflows, while Financials, Energy and Healthcare suffered redemptions.

Cash alternative ETFs continued to dominate the fixed income category, representing 63% of the total inflow. Canadian corporate bond ETFs had the second highest inflow among the category, adding $680 million of new money. Ultra-short term bond ETFs, which have minimal duration risk, also had significant inflows during the month.

There were 15 new products launched during the month of October. Among the latest offerings was a new liquid alternative strategy from Desjardins. The Desjardins Alt Long/Short Global Equity Markets ETF (DAMG-T) targets absolute positive returns regardless of whether the markets are up or down. Alternative strategies typically display low volatility and low correlation with traditional asset classes, making them popular choices during periods of uncertainty in the markets. The ETF will enter both long and short positions in futures contracts and index ETFs in order to achieve its goal. DAMG charges a 1% management fee and is also offered as a US dollar series.

Harvest ETFs released a suite of enhanced income ETFs, applying 1.25x leverage on some of their most popular covered call strategies. Harvest ETFs has already seen over $1 billion in assets flow into these equity income ETFs in 2022, as the demand for higher yields has been steadfast all year. The new ETFs aim to provide even greater yields, by applying a 25% leverage component to existing Harvest equity income ETFs. The leverage component increases the monthly cash flow paid to unitholders, but at the same time elevates the risk profile of the strategy. The initial target yield of the five new products range between 9.6%-12.8%. These ETFs do not charge an explicit management fee, however they are subject to the fees of the underlying ETFs in the portfolio.

RBC Global Asset Management expanded its lineup with the launch of two new Target Maturity Corporate Bond ETFs (maturing in 2028 and 2029). Each ETF tracks a unique index that represents the performance of a held-to-maturity portfolio consisting of primarily Canadian investment grade corporate bonds with effective maturities in 2028 and 2029, respectively. The funds will provide income for a limited period of time, until their termination date when the final net asset value is returned to the unitholders. These solutions allow investors to earn passive income and own a liquid investment, while also knowing the date at which their principal will be returned to them. RBC’s target maturity bond lineup now includes all maturity dates between 2022-2029, and they charge a management fee of 0.25%.

There were no ETF terminations in October.

Launches

TICKERNAMEASSET CLASSSUBCATEGORIESRISK RATINGINCEPTION DATEMGT. FEE
DAMG-TDesjardins Alt Long/Short Global Equity Markets ETFAlternativeLow to Medium10/13/221.00%
DAMG-U-TDesjardins Alt Long/Short Global Equity Markets ETF (USD)AlternativeLow to Medium10/13/221.00%
DANC-U-TDesjardins Alt Long/Short Equity Market Neutral ETF (USD)AlternativeMarket NeutralLow10/13/221.00%
RQQ-TRBC Target 2028 Corporate Bond Index ETFFixed IncomeTarget DateLow10/19/220.25%
RQR-TRBC Target 2029 Corporate Bond Index ETFFixed IncomeTarget DateLow10/19/220.25%
BMAX-TBrompton Enhanced Multi-Asset Income ETFMulti-AssetCovered Call, LeverageMedium10/19/220.00%
HBFE-THarvest Brand Leaders Enhanced Income ETFEquityCovered Call, LeverageMedium to High10/24/220.00%
HHLE-THarvest Healthcare Leaders Enhanced Income ETFEquityCovered Call, Leverage, HealthcareMedium to High10/24/220.00%
HLFE-THarvest Canadian Equity Enhanced Income Leaders ETFEquityCovered Call, LeverageMedium10/24/220.00%
HTAE-THarvest Tech Achievers Enhanced Income ETFEquityCovered Call, Leverage, TechnologyHigh10/24/220.00%
HUTE-THarvest Equal Weight Global Utilities Enhanced Income ETFEquityCovered Call, Leverage, UtilitiesMedium10/24/220.00%
CGBN-TCI Global Bond Currency Neutral FundFixed IncomeGlobalLow10/31/220.70%
CGIN-TCI Global Investment Grade ETFFixed IncomeGlobal, Investment GradeLow10/31/220.50%
CGIN-U-TCI Global Investment Grade ETF (USD)Fixed IncomeGlobal, Investment GradeLow10/31/220.50%
MPY-TMulvihill Premium Yield FundEquityActiveLow to Medium10/31/221.00%

Source: Inovestor

Ben Kleinberg, CFA, is product manager at Inovestor