Horizons ETFs reports assets in active funds reach CAD3bn

Oct 17th, 2016 | By | Category: ETF and Index News

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Canada-based Horizons ETFs has announced that assets under management for its actively managed exchange-traded fund suite has exceeded CAD3bn.

Horizons ETFs report actively managed suite reaches CAD3bn in AUM

Steve Hawkins, President and Co-CEO of Horizons ETFs.

Actively managed ETFs do not follow an index-tracking methodology. Instead, they employ a professional portfolio manager or management team which seeks to generate better risk-adjusted returns than a benchmark index.

While actively managed ETFs have attracted billions of dollars globally from investors, they remain a significantly smaller category in terms of invested assets compared to passive ETFs. Of the more than 4,600 ETFs listed around the world, the vast majority of the $3.2tn worth of assets are tied with passive funds. This trend is most pronounced in the US, the largest ETF market by far, where 99% of the $2.4tn under management is linked to passive ETFs, with only a tiny proportion in active ETFs, which are struggling to gain traction.

Despite the greater popularity of passive ETFs, investors will likely continue to be attracted to actively managed funds, both mutual funds and ETFs, for the possibility of achieving benchmark-beating returns.

Recently there has been a growing preference for the ETF vehicle structure over mutual funds with both active and passive ETFs gaining a higher proportion of total assets. This has been attributed to lower management fees and the flexibility afforded from intra-day tradability.

In Canada, actively managed ETFs have enjoyed greater popularity, as determined by their value of assets relative to the total ETF market, relative to global averages.

Steve Hawkins, President and Co-CEO of Horizons ETFs, commented: “We launched our first actively managed ETF in 2009, when the ETF industry in Canada was exclusively index-focused. It’s very gratifying to see that actively managed ETFs have started to gain such widespread acceptance amongst Canadian investors. In fact, with more than CAD14bn invested in this ETF category, Canada has the highest proportion of actively managed ETF assets in the world.”

Income-focused strategies are the primary beneficiaries of actively managed ETF inflows, both globally and in Canada.

“Given the popularity of active income strategies, our largest proportion of actively managed ETFs are those income-focused mandates sub-advised by Fiera Capital, one of Canada’s leading fixed income asset managers,” noted Hawkins.

The firm also notes increasing demand for actively managed multi-asset growth strategies, which are ETFs with an actively managed asset allocation strategy that invest only in other ETFs to gain access to underlying asset classes.

Hawkins concluded: ““Investors are embracing the concept that ETFs that use active management, when combined with low management fees, can be a winning proposition, regardless of which asset class or investment strategy you invest in.”

Horizons ETFs currently has 28 actively managed ETFs listed on the Toronto Stock Exchange, the largest number of actively managed ETFs from one provider in Canada.

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