Horizons ETFs Canada has lowered the total cost of ownership of the Horizons Nasdaq 100 Index ETF (HXQ CN) by switching the fund’s replication method from synthetic to direct physical replication. Following the change, the fund is now the cheapest ETF in the country to provide exposure to the pre-eminent large-cap growth index.

Canadian ETF issuer CI First Asset has launched its first fund aimed at environmental, social, and governance (ESG) conscious investors: the CI First Asset MSCI World ESG Impact ETF (CESG CN) on NEO Exchange. Rohit Mehta, President of CI First Asset ETFs, said the fund provides “a meaningful way for investors to diversify their portfolios while allocating capital towards some of today’s most pressing global issues.”

BMO Global Asset Management is to withdraw from the European ETF market. In a letter to shareholders in its ETFs, the asset manager announced its intention to close all of its London-listed ETFs and cease managing ETFs domiciled in Europe. It said the decision was based on a variety of factors, including the current level of assets under management and projected asset growth in the current market environment. The ETF closures raise some important questions with respect to fund due diligence and issuer viability.

By Terry Wood, Head of ETF Portfolio Management, EMEA at BMO Global Asset Management.

As a substitute risk-on asset class, over the longer term, global high yield bonds have provided equity-like returns with lower volatility than equities, especially when currency hedging is considered.

The Investment Association (IA), the trade body representing UK fund managers, has given the green light for ETFs to be added to its fund sectors from Q1 2020. The IA sectors provide a way of dividing the more than 3500 funds on sale in the UK into broad groups to aid comparison of similar funds. Galina Dimitrova, Director of Investment and Capital Markets at the IA, said, “We want to ensure that the IA sectors reflect the full range of products the asset management industry has to offer…ETFs are a growing part of this market and their inclusion in the sectors will enable consumers to compare across a wider variety of products.”

De-risking in an effort to reduce the volatility drag on portfolios remains a key ETF investment strategy for 2019, according to Morgane Delledonne, ETF Investment Strategist at BMO Global Asset Management. Delledonne notes that a deceleration in global economic growth and continued political and economic instability in Europe will increase the need for defensive ETFs such as those providing exposure to high-income equities and high-quality credit.

BMO Asset Management has launched seven new ETFs on Toronto Stock Exchange. The new funds include three asset allocation ETFs which invest in other BMO equity and fixed income ETFs to provide globally diversified portfolios. The other four ETFs provide exposure to different segments of the US equity and fixed income markets.

Harvest Portfolios has launched the Harvest Global Gold Giants Index ETF (HGGG CN) on the Toronto Stock Exchange, providing exposure to large-cap gold mining stocks from issuers globally. Michael Kovacs, President and CEO of Harvest Portfolios, commented, “HGGG will invest in the largest global gold producers to benefit from margin expansion as gold prices increase. We believe these companies are profitable at current gold prices and have positive earnings and price correlation as the metal rises in value.”

BMO Investments has launched two actively managed, high-conviction equity ETFs on Toronto Stock Exchange. The BMO SIA Focused Canadian Equity ETF (ZFC CN) and BMO SIA Focused North American Equity ETF (ZFN CN) provide exposure to concentrated portfolios of Canadian and North American stocks, respectively. “High-conviction portfolios – concentrated in fewer stocks than traditional funds – are increasingly in demand,” said Mark Raes, Head of Product Management Canada, BMO Global Asset Management. “We are committed to meeting the needs of advisors for their clients.”

By Morgane Delledonne, ETF Investment Strategist at BMO Global Asset Management.

Developed markets ETFs have recorded the largest global net outflows month-to-date, while relatively cheaper emerging market assets gathered net inflows. Market corrections are likely to become more frequent in the late-cycle phase, and volatility could erode long-term returns.