Toronto-headquartered CI Financial has agreed to acquire WisdomTree Asset Management Canada, the Canadian ETF business of WisdomTree Investments.
Kurt MacAlpine, CEO of CI Financial.
The transaction will see CI Financial add 14 WisdomTree ETFs collectively housing approximately C$960 million to its ETF family.
The ETFs will be rebranded CI WisdomTree ETFs, and WisdomTree will continue as the index provider for funds that track its proprietary indices.
The deal is CI Financial’s second major acquisition in the ETF space in recent years following its purchase of First Asset Investment Management in November 2015.
The firm’s current ETF roster consists of 63 funds, branded CI First Asset, with approximately C$8.0bn in assets under management.
The majority of these ETFs are classified as smart beta equity funds and primarily consist of single-factor strategies across US, Canadian, and international exposures. The firm also offers covered call equity sector ETFs as well as actively managed funds that mostly focus on fixed income markets.
In acquiring WisdomTree’s Canadian ETFs, CI Financial expands its offering of fundamentally weighted strategies. In particular, WisdomTree’s suite of “Quality Dividend Growth ETFs”, which have been well received by investors.
The largest of the funds being acquired is the $220m WisdomTree Canada Quality Dividend Growth Index ETF (DGRC CN). Meanwhile, a fund following a similar strategy but targeting US equities houses over C$140m across currency-hedged, non-hedged, and variably hedged share classes.
Additionally, while WisdomTree only offers three fixed income ETFs in Canada, they’ve gathered C$350m in assets, representing over a third of the firm’s total AUM in the country. The two largest – the WisdomTree Yield Enhanced Canada Aggregate Bond Index ETF (CAGG CN) and WisdomTree Yield Enhanced Canada Short-Term Aggregate Bond Index ETF (CAGS CN) – provide Canadian Aggregate bond exposure while seeking to enhance yield compared to the broad market by reweighting sectors in favour of higher-yielding segments.
Kurt MacAlpine, CEO of CI Financial, commented, “As Canadians increasingly adopt the ETF structure, the addition of WisdomTree’s Canadian operations will expand our line-up of mandates and increase the scale of our ETF business, which is critically important in providing investors with efficient, effective investment choices.
“Notably, this acquisition gives us additional investment management capabilities through WisdomTree’s fundamentally weighted approach to indexing, which will be a strong complement to the CI First Asset ETF lineup.”
Jonathan Steinberg, CEO of WisdomTree, added, “We have had a lot of success in the Canadian market over the past three years. This transaction allows us to benefit from the scale and resources of CI Financial and participate more cost-effectively in the continued growth of the Canadian ETF market by providing index licenses for each of the WisdomTree Canada funds that currently track WisdomTree’s proprietary indexes.”
The acquisition is expected to close in the first quarter of 2020, subject to regulatory approval, including approval of unitholders of the WisdomTree Canada ETFs.