Confucius once said that “everything has beauty, but not everyone sees it.” China may be today’s Confucian case in point. The bulls (if we may speak for
the handful of them still holding their day jobs) are seemingly near extinction. The gloomy case is widely known: Overleverage, overbuilding, and
overcapacity plague the economy. Return on investment for the state sector is in chronic decline, and residential home prices remain elevated. On top of
that, a large, opaque “shadow banking system” poses a systemic risk to the entire credit system.
Globally, investors have been piling into investments like gold, U.S. equities, and emerging market debt, but recent positioning in Canadian stocks and
bonds is less crowded. Here are some reasons why.
– I like the idea of exchange-traded funds because their MERs are lower than mutual funds. But I’m a little unclear as to how their share prices are
determined or how they manage to stay in business – some ETF MERs are scarcely above zero. Also, how do closed-end funds figure into this mix? – Brad M., Kanata, Ontario
Earlier this year, Canadian ETF assets surpassed the $100 billion mark for the first time. And although the asset growth has been rapid, ETFs still make up
just a small portion of the $1.3 trillion Canadian mutual fund industry. One of the main benefits for using ETFs instead of mutual funds has to do with the
fact that the fees, specifically the management expense ratios (MERs), are typically much lower. And with more players entering the ETF market, which is
increasing competition and leading to lower and lower fees, the popularity of ETFs will only increase. But does ETFs' performance match their increased
popularity? One gauge might be how they do in Fundata’s annual FundGrade A+ Awards. The results are
While it might be a bit too early for many investors to step into direct European equity exposure, those with a higher appetite for risk may want to
consider it. One interesting way to get some exposure to the region without taking on the full risk of the market would be to use the First Asset MSCI Europe Low Risk Weighted ETF.
Watching Alejandro Iñárritu’s harrowing survivalist drama The Revenant is an excruciating, visceral experience. For some, however, watching the mauling in the oil market over the last few years was even grislier. Yet 2016 has provided a respite from the thrashing – oil, the wider commodity complex, and resource-driven currencies have returned with a vengeance. For commodity bears like us, this revenant-like performance has inflicted some short-term pain. Where to next?
As the line between active and passive index exchange-traded funds becomes increasingly blurred, the number of ETFs on offer that could theoretically fall into either category is steadily growing. While not technically an actively-managed ETF, theFirst Asset Morningstar Canada Momentum Index ETF (TSX: WXM) is designed to track an index that uses a number of key fundamental measures to screen for stocks that meet the criteria on a quarterly basis. Call it an active/passive hybrid, but one that has had a measure of success, having been awarded the Fundata FundGrade A+ Award for 2015.
Actively managed exchange-traded funds are steadily encroaching on the ground once held by mutual funds. And they’re also steadily redefining what we mean by “exchange-traded fund.” No longer are ETFs only “passive” investments that track an index. Instead, like the Horizons Active Cdn Dividend ETF (TSX: HAL), actively managed ETFs now specifically attempt to outperform their benchmark index with mandated investment strategies, tactics, and objectives, led by a team of managers who pull the strings and push the levers. Here’s a look at how Horizons does it.