Toronto-headquartered AGF Investments has launched two actively managed ETFs in the US through the firm’s quantitative and factor-based investment platform – AGFiQ.
The AGFiQ Global Infrastructure ETF provides exposure to global infrastructure stocks selected through a multi-factor process.
The funds, which have been listed on NYSE Arca, are the AGFiQ Global Infrastructure ETF (GLIF US) and AGFiQ Dynamic Hedged US Equity ETF (USHG US).
“The launch of these new products reinforces AGF’s commitment to bringing new alternative solutions to investors in the US,” said Bill Carey, Chief Executive Officer, AGF Investments.
“At the same time, it supports the further growth of AGF’s footprint in the US, leveraging the organizational strength, research acumen, investment capabilities, and marketing and product development.”
Global infrastructure
The AGFiQ Global Infrastructure ETF invests in infrastructure companies located throughout the world. To be eligible for selection, a firm must derive at least 50% of its revenue, or devote at least 50% of its assets, to infrastructure-related activities.
Infrastructure refers to the systems and networks of energy (oil & gas pipelines), transportation (roads & bridges), communication (towers & satellites), utilities (electric, gas, and water distribution facilities) and other services required for the functioning of an economy.
The fund may also hold equity securities of companies that finance infrastructure assets or projects, which may include real estate investment trusts (REITs).
Exposure to firms listed in the US will be capped at 60%. Stocks from emerging market countries, as defined by MSCI, are also eligible for inclusion.
Security selection is guided by a proprietary, multi-factor quantitative model which evaluates companies based on growth, value, quality, and risk characteristics. Weighting constraints are employed to promote diversification at the country, sector, industry, and individual security levels.
The fund comes with an expense ratio of 0.45%.
“As an active, multifactor ETF, AGFiQ Global Infrastructure or GLIF provides potential diversification and risk reduction benefits for investors,” said Florence Narine, Senior Vice-President, Head of Product, AGF Investments. “Listed infrastructure securities typically offer higher dividend yields than equities or bonds and can be used as a hedge against inflation or to mitigate rising rates.”
US equities
The AGFiQ Dynamic Hedged US Equity ETF is a fund-of-funds which invests in S&P 500 sector ETFs in order to gain exposure to the US equity market.
The fund uses a sector allocation model that is driven by size, valuation, momentum, and quality factors. This model runs on a daily basis, ranking each sector based on relative attractiveness and indicating whether to take an overweight, underweight, or neutral position to a particular sector relative to that sector’s weight in the S&P 500.
The managers also utilize a market risk model that seeks to limit participation in falling equity markets. Generally, the fund will increase its allocation to cash, money market securities, and low beta and market neutral ETFs when the equity market outlook is unfavourable.
The fund’s expense ratio is 0.55%.
Narine added, “As a risk-managed holding, AGFiQ Dynamic Hedged US Equity ETF offers exposure to the long-term growth potential of US equities using a multi-factor approach designed in an effort to have lower volatility and better risk-adjusted returns relative to the market through its use of a dynamic hedging model.”