Arrivée Desjardins – Facteurs multiples et FNB obligataires + Privilegiées = ?

Desjardins Wealth Management recently filed for their launch of a total of 9 ETFs, covering multi-factors strategies, as well as fixed income and preferred shares:

=> View Prospectus =>Click HERE!

Desjardins Canada Multifactor-Controlled Volatility ETF(“DFC”)

Desjardins USA Multifactor-Controlled Volatility ETF (“DFU”)

Desjardins Developed ex-USA ex-Canada Multifactor-Controlled Volatility ETF (“DFD”)

Desjardins Emerging Markets Multifactor-Controlled Volatility ETF (“DFE”)

(collectively, the “Desjardins Multifactor-Controlled Volatility ETFs”)

Desjardins Canadian Universe Bond Index ETF (“DCU”)

Desjardins Canadian Short Term Bond Index ETF (“DCS”)

Desjardins 1-5 year Laddered Canadian Corporate Bond Index ETF (“DCC”)

Desjardins 1-5 year Laddered Canadian Government Bond Index ETF (“DCG”)

(collectively, the “Desjardins Canadian Fixed Income ETFs”)

and

Desjardins Canadian Preferred Share Index ETF (“DCP”)

(the “Desjardins Canadian Preferred Share ETF”)

Initial thoughts:

Maybe? Multi-Factors are the extension of individual “smart beta” factors from one specific factor (value, momentum, volatility, size, yield, quality) to selecting underlying constituents that best fit a blend of factors. Is there within the offering a double focus on volatility? Not sure yet …

Interesting is though, that the partner in terms of the index construction process, is EDHEC – which, if memory serves, was the one firm a while back to state that if their smart beta strategy failed to add value, then they wouldn’t charge fees … => Click HERE for more info on “Scientific Beta”.

All-in, if factors are good (and they can be), then the multi-factor flavor revolves around electing the “all-season” version, meaning blending factors such that one isn’t left in the cold in the one factor that happens to be out of favor for … (years?) – so let’s say Multi-Factors are a good thing and certainly worth considering versus the consistently underperforming active management space …

Not a Given… – In terms of the fixed income component of the offering including the prefs ETF, not obvious to me how the “first mover advantage” of others will be overcome. It doesn’t seem to be through price, which doesn’t appear out of line (in fact in a few instances is exactly the same…) as for some existing, multi 100 Million, if not existing Billion $ + ETFs, which by definition, then, would have vastly superior primary liquidity… (and likely tigher bid-ask, and all that good stuff…)

So – Net on Net – other than for the fact that the ETF space is obviously a growth area everyone wants a piece of, not obvious, absent the “distribution”, or captive angle, that these ETFs stand out sufficiently to carve themselves a meaningful AUM slice of the industry’s pie in short order. Possibly even less so on the fixed income front – and never mind the pref side. There already are several Pref ETFs with again hundreds of million of $ of AUM, and decent recent performance (in some instances very good longer term track records – such as HPR’s) – so just because you are the latest … not sure that will elicit much interest … (then again, maybe the thought here is a pure copy cat of the “let’s exchange IAs line items of prefs within the firm and turn it into a diversified Reset basket via DCP … weirder things have happened…)

Of course, I stand happy to be corrected, and it is always good to welcome a new player to the space and wish them success – So Welcome Desjardins, and Bonne chance!

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