First Trust has made its exchange-traded funds debut in Canada with the launch of three AlphaDEX ETFs on the Toronto Stock Exchange (TSX).
Three First Trust AlphaDEX ETFs have made their debut on the Toronto Stock Exchange (TSX).
The AlphaDEX methodology is a transparent, rules-based weighting methodology designed to exploit possible mispricings and potential drawbacks of market-capitalisation-weighted benchmarks.
The methodology has proved hugely popular in the US, where ETFs linked to it have accumulated assets in excess of $4 billion. A number of AlphaDEX ETFs have also been rolled out in Europe, on the London Stock Exchange, garnering significant interest from investors.
Commenting on the launch, Karl Cheong, Senior Vice President and Head of Product Development at FT Portfolios Canada, said: “When you look at the Canadian ETF marketplace today, the majority of ETFs and assets under management are tied to market-capitalisation-weighted indices which, by their very nature, overweight larger potentially overvalued companies and underweight smaller, potentially undervalued companies”
He added: “We believe this is an optimal time for Canadians to diversify their portfolios into fundamental strategies and we are committed to providing investors with opportunities to capitalise on companies that may have stronger investment merit through ETFs using the proprietary AlphaDEX methodology.”
Bobby Eng, Senior Vice President and Head of Sales at FT Portfolios Canada, said: “The AlphaDEX methodology provides the investment marketplace with a hybrid approach of blending the desired features of a traditional passive index tracking ETF with the risk management and filtering process of active management. We believe this will be the next evolution for the Canadian ETF marketplace.”
The three initial ETFs (further product launches are planned) provide investors with broad market exposure to high-income equity strategies across different geographies. They are:
First Trust AlphaDEX Canadian Dividend Plus ETF (FDY, FDY.A)
Seeks to provide exposure to the performance of a portfolio of higher-yielding Canadian dividend-paying stocks. In addition, the ETF will, from time to time, write covered call options on a portion of the portfolio in order to produce additional income.
First Trust AlphaDEX US Dividend Plus ETF (CAD-Hedged) (FUD, FUD.A)
Seeks to provide currency-hedged exposure to the performance of a portfolio of higher-yielding US dividend-paying stocks. In addition, the fund will, from time to time, write covered call options on a portion of the portfolio in order to produce additional income.
First Trust AlphaDEX Emerging Market Dividend ETF (CAD-Hedged) (FDE, FDE.A)
Seeks to provide currency-hedged exposure to the performance of a portfolio of dividend-paying equity securities domiciled in the emerging markets.