CIBC debuts with smart beta and actively managed ETFs

Jan 29th, 2019 | By | Category: ETF and Index News

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Newcomer CIBC Asset Management has launched four ETFs on the Toronto Stock Exchange including two smart beta equity funds and two actively managed fixed income funds.

David Scandiffio, President and CEO, CIBC Asset Management

David Scandiffio, President and CEO, CIBC Asset Management.

David Scandiffio, President and CEO, CIBC Asset Management, commented, “Our entry into the growing ETF industry is a natural extension of our investment capabilities, allowing us to deliver solutions that meet clients’ varying investment needs when it comes to structure or price.”

Scandiffio continued, “We have a long history of managing active and passive strategies and we developed these ETFs with our clients’ evolving needs in mind, including solutions for a low-yield, rising rate environment.”

Smart beta equity ETFs

The CIBC Multifactor Canadian Equity ETF (CMCE CN) and CIBC Multifactor US Equity ETF (CMUE CN) track in-house indices and invest in equally weighted portfolios of Canadian and US equity securities, respectively.

Constituents with quality, value, price momentum, and low volatility characteristics are favored for selection. Index rebalancing occurs on a semi-annual basis.

Both ETFs trade in Canadian dollars and charge management expense ratios (MER) of 0.25%. A currency-hedged version of the US equity fund is also available under the ticker CMUE.F CN.

Actively managed fixed income ETFs

The actively managed ETFs aim to generate current income for investors while preserving capital.

The CIBC Active Investment Grade Floating Rate Bond ETF (CAFR CN) invests primarily in Canadian investment grade floating rate debt. The fund may also invest partially in fixed-rate debt but derivatives will be used to mitigate the effect of interest rate movements on portfolio performance. The fund’s MER is 0.30%.

Meanwhile, the CIBC Active Investment Grade Corporate Bond ETF (CACB CN) invests primarily in Canadian investment-grade corporate bonds. Its MER is 0.35%.

The funds undertake a bottom-up analysis of bond issuers combined with a top-down analysis of an industry’s potential in a given economic environment. For security selection, the managers focus on issuer-specific fundamentals, quantitative modeling of valuations, and liquidity. Both technical and fundamental analysis will be utilized in the investment process.

The ETFs may invest up to 30% in debt of foreign issuers and up to 10% in high yield issues.

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