Against all Odds (Perspectives May 2017)

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?

Recent Developments:

  • 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
-$259,361,601 $86,116,073 $21,107,034 $2,902,366 $- -$149,236,128 ishares
-$7,699,539 -$16,392,415 $36,539,177 $12,810,099 $- $25,257,322 ishares claymore
$179,046,855 $38,336,516 $15,409,477 $2,992,436 -$42,712,358 $193,072,927 horizons
$396,380,704 $385,247,084 $39,262,958 $1,217,845 $- $822,108,590 bmo etfs
$8,493,013 $33,896,658 $45,653,595 $- $- $88,043,265 rbc gam etfs
$1,794,610 $5,934,080 $- $- $- $7,728,690 td am
$28,820,001 $20,964,870 -$1,115,350 $- $- $48,669,521 first assets
$11,497,572 $39,545,782 $8,933,007 $3,781,710 $- $63,758,071 powershares
$243,982,992 $156,071,857 $- $- $- $400,054,849 vanguard
-$1,183,854 $5,960,069 $- -$1,959,350 $- $2,816,865 ft portfolios canada
$12,490,205 $19,442,541 $2,508,070 $- -$191 $34,440,625 purpose
$- $- $- $- $- $- auspice capital
$1,147,036 $- $- $- $- $1,147,036 questrade
$5,808,050 $5,808,050 lysander
$2,910,191 $- $- $- $- $2,910,191 hamilton capital
$15,344,095 $- $- $- $- $15,344,095 sphere etfs
$10,894,790 $193,760,440 $- $- $- $204,655,230 mackenzie etfs
$15,595 $15,595 Wisdom Tree
$12,632,125 $- $- $- $- $12,632,125 Harvest Portfolios
$101,435,740 $- $- $- $- $101,435,740 AGFiqAssetMan
$10,301,200 $45,244,500 $9,988,550 $- $- $65,534,250 Desjardins
$35,828,310 $- $- $- $- $35,828,310 Manulife
$804,770,040 $1,014,128,055 $184,094,567 $21,745,105 -$42,712,549 $1,982,025,218

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
sphere etfs $15.3 SHE SHU
harvest portfolios $12.6 HHL; HPF N/A
td am $7.7 TDB N/A
lysander $5.8 PR N/A
hamilton capital $2.9 HFY N/A
ft portfolios canada $2.8 FSL; FSD ETP
questrade $1.1 QRI N/A
wisdom tree $0.0 DGR.B DQD
auspice $- N/A N/A
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.

Comments are closed.