First Asset launches smart beta ETF on Canadian equities

May 4th, 2016 | By | Category: Equities

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Canadian exchange-traded fund provider First Asset Investment Management has launched the First Asset MSCI Canada Quality Index Class ETF (FQC) on the Toronto Stock Exchange. The fund provides a smart beta equity exposure to blue-chip Canadian companies.

First Asset launch smart beta ETF targeting Canadian equities

The First Asset MSCI Canada Quality Index Class ETF (FQC) offers tax-efficient distributions in the form of return of capital, capital gains, and/or dividend income – all of which are taxed at lower rates than ordinary Canadian or foreign source income.

The ETF tracks the MSCI Canada Quality Index which references 25 Canadian companies, including large and mid-cap stocks with sustainable competitive advantages, durable business models, consistently improving earnings and healthy balance sheets. The index identifies stocks with high quality scores based on three fundamental variables: high return on equity, stable year-over-year earnings growth and low financial leverage.  Constituents are weighted according to their relative quality scores and their market capitalizations.

As of 29 April 2016 the fund has significant exposure to the consumer staples (21.5%), financials (20.3%), energy (14.1%), consumer discretionary (13.8%) and industrials (11.2%). The total expense ratio is 0.60%.

The First Asset MSCI Canada Quality Index ETF is one of a series of new tax-efficient First Asset ETFs. This series of ETFs offers tax-efficient distributions in the form of return of capital, capital gains, and/or dividend income – all of which are taxed at lower rates than ordinary Canadian or foreign source income. Furthermore, switches can be made between ETFs within the corporate class structure without triggering a taxable capital gain. A capital transaction only occurs when a shareholder redeems from the corporation.

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