Against all Odds – Markets continue to defy the odds, high valuations in the US, rising geopolitical tensions in Asia, winds of war on the trade front (NAFTA) – and the ongoing rise of populism, notably in Europe. French Presidential elections held May 7th could – with a Macron victory – possibly given markets there further ground for embracing animal spirits – but after that?
- Home Group Capital – Secured an expensive lifeline, but some worry about potential contagion – something Mawer’s Hall sees as contained, given Canada’s strong firefighting contingent => Read More Click HERE!
- USD/CAD – The Loonie was under pressure in April, losing 2.7% vs a USD whose own fortunes experienced a reversal, as bullish bets on the greenback have by now all but vanished.
- Donald Trump – The US President’s first 100 days came and went, and could perhaps be characterized as having been high in rethoric, and low on actual deliveries
- Tensions with North Korea – Are a rather worrisome wildcard …
- Trailer Fees ETFs – Soon a Thing of the Past? First Asset followed Horizons lead and announced last month it too would no longer carry “Advisers’ Class” (aka Trailer Fees / Embedded compensation) ETFs.
ETF Industry Highlights – April 2017
April – AUM rose an estimated further CAD 3.3 Billion in April, to reach CAD 126.3 Bn, on a combination of steady net new issuance (+CAD 2.0 Bn) and favorable markets, including a weakening CAD (+1.3Bn). Aggregate AUM to April 30, 2017 is 30% higher than where it stood a year ago, with net new creates to-date rising at a record pace (+CAD 8.5Bn to Apr 30). The arrival of additional entrants – Desjardins and Manulife in April – should further support this momentum and bodes well as far as 2017 seeing the industry achieve new records of Assets.
Breakdown of net new creations – Tier 1 players (iShares; BMO ETFs; Vanguard; and Horizons ETFs) claimed 65.1% of net new creations in April, Tier 2 (RBC GAM ETFs; Purpose Investments; PowerShares; and First Asset) 11.9%; and Tier 3 (13 providers) 23%, notably with Mackenzie’s latest entry in the industry MHYB launched April 26 ending the month with $179MM of Assets.
Canadian ETFs – Aggregate assets across the Canadian ETF industry rose $3.3Billion in April (2.7%) versus their March 2017 level.
Continued strong aggregate creations (+$3.2Bn – slightly lower than March’s level of $3.7Bn) were offset by retractions totalling CAD 1.2Bn (+$1.6Bn in March), with the resulting net new creates off from last month’s $2.2 Billion as a result (+$2.0 Bn net creates for April).
ETF industry Highlights – Flows for April 2017
- Equity flows – Picked up from their March level (+$805MM vs +608MM in March). Main beneficiaries were BMO; Vanguard; and Horizons. iShares was the exception, with net outflows in the category of $260MM (XIU: -$434MM).
- Fixed income flows – Inflows into Bonds declined relative to the sharp uptick they’d experienced in March (April: +$1.0Bn, vs March: +$1.2Bn).
- Preferred Shares – Flows into Preferreds remained steady: +$184MM.
Summing up creations/redemptions versus market impact for April 2017:
Latest market share numbers (with/without XIU):
ETFs by the numbers: April 2017
- 21 ETF providers. Tier 1: 90% of AUM ($113.6 Bn); Tier II: 8.5% of AUM ($10.8 Bn); Tier III: 1.5% of AUM ($1.9 Bn).
- 30% y/o/y AUM Growth – placing the industry on solid footing for a record year, markets … and investors willing …
- Aggregate AUM: $126.3Billion (30/4/17)
- +$3.3 Bn: AUM increase from March 30, 2017 (iShares: +$293MM; BMO ETFs: +$1.3Bn; Vanguard: +$620MM; Horizons: +$214MM; First Asset: +$91MM; PowerShares ETFs: +$93MM; RBC GAM ETFs: +$117MM; FT Portfolios: +$5MM; Purpose Investments: +$46MM).
ETFs in April 2017: Aggregate Creations/Redemptions across ETF providers:
|equities||fixed income||preferreds||portfolios||commodities||Mar-17||Flows by Category|
|$8,493,013||$33,896,658||$45,653,595||$-||$-||$88,043,265||rbc gam etfs|
|-$1,183,854||$5,960,069||$-||-$1,959,350||$-||$2,816,865||ft portfolios canada|
Top creations; Top redemptions – by provider (with tickers):
|ETF Provider||Net Creations:||Top Creations:||Top Redemptions:|
|bmo etfs||$822.1||ZEA; ZAG; ZFS; ZQQ; ZWC; ZCS; ZSP; ZPR; ZPL; ZWE||ZBK; ZLU; ZUB; ZRE; ZLI; ZDY; ZUE; ZUT; ZPS; ZMT|
|vanguard||$400.1||VSC; VFV; VAB; VCN; VSB; VUN; VEE; VSP; VIU; VCE||VXC; VEF; VI|
|mackenzie etfs||$204.7||MHYB; MFT; MEE||N/A|
|horizons||$193.1||HMMJ; HXT; HFR; HPR; HXX; HGU; HAB; HAF; HVU; HSH||HXH; HNU; HXU; HOU; DLR|
|AGFiqAssetManag||$101.4||QCD; QUS; QIE; QEM||N/A|
|rbc gam etfs||$88.0||RPF; RID; RLB; RPD; RQG; RHI; RHP||RUD.U|
|Desjardins||$65.5||DCU; DCC DCS; DCP; DFU; DFC; DCG||*ETFs launched in April|
|powershares||$63.8||PGL; PSB; PPS; UHD.F; PCD||ULV.F|
|first assets||$48.7||RWW.B; FIG; VXM.B; FLI; RIT; TXF; WXM||XXM; XXM.B; CSY|
|Manulife||$35.8||MINT.B; MINT; MCLC; MULC.B; MULC; MUMC||* ETFs launched in April|
|purpose||$34.4||PSA; PDF; PYF||BND; PEU.B|
|ishares claymore||$25.3||CDZ; CPD; FIE; CLG; CGR; CYH; CVD; CMR; CEW; CLG.A||CJP; CBO; CUD; CLU; CIE; COW; CBO.A; CPD.A; CEW.A; CRQ.A|
|harvest portfolios||$12.6||HHL; HPF||N/A|
|ft portfolios canada||$2.8||FSL; FSD||ETP|
|ishares||-$149.2||XSH; XEF; XIC; XSP; XAW; XRE; XSE; DXP; XUS; XFR||XIU; XFN; XBB; XSB; XCD; XDV; XBZ; XSU; XCS; XMA|
|$1,982.0||Total||Source: ETFi DB as at Apr 30, 2017|
- Min/Low Vol; Risk Weighted ETFs – Flows in or out of the category were close to even in April, all the while First Asset’s love affair with Risk weighting the World continued, albeit at a reduced pace (+$23MM in April versus +$109.7MM inflows in March).
- Dividend ETFs – Inflows into Dividend ETFs remained steady (+$157MM in April, vs 178MM in March).
- High Yield – Inflows into the HY category picked up further: +$260MM vs $172MM for March, but as noted, one ETF – MHYB represented the bulk of that.
- EM flows – Picked up noticeably (chasing performance?): +$93MM (vs $48.2MM in March).
- Europe – Picked up noticeably as well: +$95.7MM (+$38MM in March) – relief that France won’t “FREXIT” it?
- Sectors – Notable outflows out of US Banks (ZBK; ZUB) – possibly a reflection of less bullish sentiment on the US raising rates further from here? Oil and gas related: Flows were in the negative across Bull+ Oil; Bull+Gas; AND Bear+Oil and Bear+ Gas – though modestly so.
- Other – Medical Marijuana made a noted entrance into the ETF product offering, rising through the CAD 100MM mark in record time, producing 20% gains in days, before checking back close to $10 starting point…
- Japan – CAD Hedged RAFI Japan experienced outflows.
- Factors – Beyond Min/Low Vol, saw inflows of CAD 186MM, including new entries in the category from Manulife and Desjardins.