Evolve Funds has launched a new actively managed ETF in Canada providing exposure to a globally diversified portfolio of stocks considered to be leaders in their respective sectors.
Raj Lala, President and CEO at Evolve ETFs.
The Evolve Future Leadership Fund has listed on the Toronto Stock Exchange and comes with a management fee of 0.75%.
The fund is available in Canadian dollar-denominated currency-hedged (LEAD CN), Canadian dollar-denominated unhedged (LEAD.B CN), and US dollar-denominated unhedged (LEAD.U CN) share classes.
The ETF seeks to provide long-term capital appreciation by investing primarily in companies from four sectors – finance, healthcare, technology, and media & entertainment – that Evolve believes stand to benefit from long-term economic growth.
Security selection is driven by quantitative techniques and fundamental analysis that includes a proprietary multi-factor model. A risk management overlay is deployed to establish constraints on the amounts invested in individual securities.
Raj Lala, President and CEO at Evolve ETFs, commented, “Many companies with strong growth in the past haven’t necessarily adapted their business models to remain as sector leaders in the future. Additionally, there are a number of companies that are positioned to be future leaders in growth sectors such as cloud computing, eGaming, cybersecurity, genomics, and telehealth.
“LEAD was designed as a single investment solution, providing investors with exposure to both the incumbents and the future leaders of tomorrow.”
The fund’s largest four holdings consist of other Evolve sector and thematic ETFs, specifically the Evolve Global Healthcare Enhanced Yield Fund (6.7%), Evolve Cyber Security Index Fund (5.4%), Evolve E-Gaming Index Fund (4.5%), and Evolve US Banks Enhanced Yield Fund (4.0%). Beyond this, the ETF contains a further 23 holdings in single stocks with position weights ranging between 1-3%.
In a bid to boost its income profile, the ETF may write covered call options on up to 33% of portfolio assets, at the managers’ discretion.
A covered call is an options strategy whereby an investor holds a long position in an asset and sells or “writes” call options on that same asset in an attempt to generate more income (the additional income from option premium) than the asset would otherwise provide on its own from dividends or other distributions.
According to the fund’s prospectus, the ETF targets an annual yield of 7.0%. Distributions are sent to investors on a monthly basis.