New ETFs for the Canadian market

Article Excerpt

Here are three new ETF launches. Each uses “quanitative modelling.” That may make their investment approach sound scientific; however, in our view, it will likely detract from their long-term returns. Many ETFs that use a socalled “black box” to pick stocks find the approach works only for a while, or in retrospect. FRANKLIN LIBERTY RISK MANAGED CANADIAN EQUITY ETF $21 (Toronto symbol FLRM; Market cap: $6.2 million) The ETF follows a weighted-factor, or rules-based, approach to selecting stocks. Those factors are quality, value, volatility (as measured by beta, see box this page) and momentum. The ETF also partially hedges its equity market exposure by buying put options and may hold a portion of the assets in cash. The fund launched on May 30, 2017, and has an MER of 0.30%. It holds a large portfolio of 122 stocks. Industry weights are skewed towards financials at 42%, while natural resources is only at 16%. That’s much lower than the weighting for most Canadian…

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