Mackenzie Investments rolls out three smart beta ETFs

Sep 9th, 2016 | By | Category: Equities

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Canada-based Mackenzie Financial Corporation (Mackenzie Investments) has launched three new smart beta exchange-traded funds in partnership with French asset manager and index provider TOBAM.

Mackenzie Investments rolls out three new smart beta ETFs

Mackenzie Investment’s smart beta offerings harness TOBAM’s proprietary methodology to maximise diversification within their selected regions.

Designed to serve as core portfolio holdings, the ETFs attempt to protect portfolios from structural bias and unmanaged risks often found in cap-weighted indices. The funds utilize TOBAM’s proprietary methodology with the aim of maximising portfolio diversification while targeting either global developed, global developed ex-North America, or developed Europe stocks.

Diversifying portfolios has been shown to be particularly important for protecting investor wealth during stressed market conditions, as investors whose portfolios were concentrated in tech stocks during the bursting of the dot-com bubble, or in financial stocks during the 2009 crisis, found out the hard way.

Barry McInerney, President and Chief Executive Officer of Mackenzie Investments, commented: “Investors are looking for solutions that enhance diversification and offer exposure beyond the Canadian borders and we are pleased to be the exclusive provider of this methodology to retail investors in Canada. Mackenzie ETFs and mutual funds are agile products that offer investors innovative choices for building diversified, long-term portfolios.”

Michael Schnitman, Senior Vice President of Product for Mackenzie Investments, added: “At Mackenzie Investments, we strive to offer innovative products that can help Canadians meet their investment goals. These products, designed to be core holdings and incorporating active currency management, work well for Canadian retail investors who are seeking better diversification to potentially outperform benchmarks.”

The diversification ratio formula underpins TOBAM's methodology for maximising diversification within its indices.

The diversification ratio formula underpins TOBAM’s methodology for maximising diversification within its indices.

Each ETF tracks a proprietary index designed by TOBAM. The TOBAM Maximum Diversification Index Series selects individual stocks and their weights to significantly reduce the correlations compared to market cap-weighted approaches. The index does this by employing a mathematical definition of diversification, which TOBAM defines as the Diversification Ratio.

The Mackenzie Maximum Diversification All World Developed Index ETF (TSX: MWD) tracks the TOBAM Maximum Diversification All World Developed Index. The index is up 9.2% per annum over the past five years with annual volatility of 10.4%. There are 1074 constituents in the index with an average market cap of $49.2bn. The largest country exposures are to the US (51.1%), South Korea (8.2%), Japan (7.5%), Canada (7.5%) and Germany (4.0%). The largest sector exposures are to consumer goods (18.8%), consumer services (17.1%), health care (15.5%), financials (10.1%) and industrials (10.1%).

Source: Mackenzie Investments.

Source: Mackenzie Investments.

The Mackenzie Maximum Diversification All World Developed ex North America Index ETF (TSX: MXU) tracks the TOBAM Maximum Diversification All World Developed ex North America Index. The index is up 5.2% per annum over the past five years with annual volatility of 11.7%. There are 895 constituents in the index with an average market cap of $25.3bn. The largest country exposures are to Japan (18.0%), South Korea (17.8%), the UK (12.8%), Switzerland (7.8%) and Hong Kong (7.1%). The largest sector exposures are to consumer goods (22.4%), health care (14.9%), industrials (14.5%), consumer services (13.4%) and financials (9.8%).

Source: Mackenzie Investments.

Source: Mackenzie Investments.

The Mackenzie Maximum Diversification Developed Europe Index ETF (TSX: MEU) tracks the TOBAM Maximum Diversification Developed Europe Index. The index is up 8.6% per annum over the past five years with annual volatility of 14.7%. There are 418 constituents in the index with an average market cap of €24.5bn. The largest country exposures are to the UK (26.6%), Switzerland (14.6%), Germany (12.9%), France (11.5%) and Denmark (7.9%). The largest sector exposures are to consumer goods (18.2%), health care (14.4%), industrials (13.6%), consumer services (12.5%) and financials (10.5%).

Source: Mackenzie Investments.

Source: Mackenzie Investments.

The funds have been launched just a few months after the introduction of similar ETFs from Mackenzie Investments, also utilizing the TOBAM maximum diversification methodology but targeting either Canadian or US-based exposures exclusively.

 

Michael Cooke, Senior Vice President and Head of Exchange Traded Funds at Mackenzie Investments, said: “We are committed to offering products that provide innovative solutions which include the Canadian and US smart beta ETFs listed in Canada earlier this year. These new maximum diversification ETFs broaden that suite of offerings to offer choice and help investors aiming to achieve superior performance with lower risk over reasonable periods of time.”

Each fund in the suite has a total expense ratio of 0.60%.

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