Manulife Investments has launched two new multi-factor ETFs on the Toronto Stock Exchange (TSX). The funds are sub-advised by Dimensional Fund Advisors and provide exposure to Canadian and US equities. Both the Manulife Multifactor Canadian SMID Cap Index ETF (MCSM CN) and the Manulife Multifactor US Small Cap Index ETF (MUSC/B CN) give investors access to the size, value and quality premiums.
The two new ETFs bring the total offered by Manulife to six, all of which track Dimensional multi-factor indices.
Bernard Letendre, president of Manulife Investments, commented: “Manulife Investments is focused on creating a holistic suite of value-added investment products for Canadians. These two new offerings to our ETF platform, managed by Dimensional Fund Advisors, helps move us closer to that goal.”
MSCM tracks the John Hancock Dimensional Canadian SMID Cap Equity Index. The index covers securities listed in Canada issued by companies whose market capitalisation falls between the 75th and 251st largest Canadian firms. The index is then tilted towards the value and quality factors by removing the bottom quartile of stocks when ranked by price-to-book ratio and profitability respectively. Remaining securities are market cap weighted to form the index.
MUSC/B tracks the John Hancock Dimensional Small Cap Index. The index is constructed in the same manner as the above, except the selection universe consists of US-listed equities whose market capitalisation is smaller than the 750th largest US company but larger than the smallest 4% of US companies.
MUSC/B also has a CAD-hedged version under the ticker symbol MUSC. MSCM has an expense ratio of 0.60%, while MUSC/B and MUSC have expense ratios of 0.50% and 0.55% respectively.
Manulife has four existing ETFs, launched in April this year, that track indices using the same methodology and offer exposure to Canadian large-caps, US large-caps, US mid-caps and developed international equities (see: Manulife and Dimensional unveil multifactor ETF suite).
US investors can access the same family of Dimensional indices through US-listed ETFs offered by John Hancock. Dimensional is seen as an authority in the world of factor investing and counts celebrated finance academics Eugene Fama and Kenneth French as board members.