Canada's newest exchange-traded fund (ETF) company launched on Tuesday with a promise to deliver a lineup that will grow to more than 30 "factor-tilted" products as well as leverage the guidance of experienced investment industry insiders.
Toronto-based Sphere Investment Management Inc. is aiming to deliver a "wealth-management platform based on ETFs" that provide financial advisors and their clients with options that best suit different risk profiles and respond to market conditions, says Lewis Bateman, the firm's founder and CEO.
"We're going to be actively making sure that [advisors] have the necessary information so that when they have meaningful dialogues with their clients, our products can be those solutions when market conditions change," says Bateman.
Sphere's first four products focus on a factor of providing sustainable dividends that are appropriate for stable markets. Sphere FTSE U.S. Sustainable Yield Index ETF and Sphere FTSE Canada Sustainable Yield Index ETF have already launched while Sphere FTSE Asia Sustainable Yield Index ETF and Sphere FTSE Europe Sustainable Yield Index ETF are available as of today.
The firm will quickly follow the release of sustainable yield ETFs with products that focus on low volatility for choppy market conditions and growth-based ETFs for when markets rally, explains Bateman.
"We think factor-tilted solutions are ones that can give [investors] a good risk profile for a period of time," he says.
The lineup will grow to consist of more than 30 products, which are only factor-tilted, smart beta ETFs — something Bateman believes distinguishes Sphere from its competitors.
Sphere is also looking to make its mark with ETFs that are geographically diversified. Its four sustainable yield ETFs are being released with a concentration on Canada, the U.S., Europe and Asia, a strategy that will be replicated with the launch of the low-volatility and growth products.
"If you look at the amalgamation of the $1.3-trillion mutual fund industry, approximately 60% of those assets are held in Canadian-exposed strategies," explains Keith McLean, president and chief investment officer with Sphere. "Given that Canada represents less than 4% of the world's market capitalization, that home bias is far too aggressive from our perspective on a risk return basis."
The management expense ratio for all products is the same, at 54 basis points, in order to provide investors with equal opportunity to all geographies, according to Bateman.
Bateman is also touting the team behind Sphere: "A part of our belief is that we have one of the strongest ETF teams in the business with more than 100 years combined expertise in portfolio management, trading and research. We really rounded off our team right off the bat with leading experts in each area."
In addition to Bateman, who has held senior roles with First Asset Investment Management Inc. and Horizons ETFs Management (Canada) Inc., both based in Toronto, McLean's professional experience includes three years as managing director and head of equities with Toronto-based GMP Investment Management LP before the firm was rebranded as CQI Capital Management LP in 2013.
The chairman of the firm's board of directors is Gerry Throop, who was executive vice president, managing director and head of global equities with Montreal-based National Bank of Canada between 2007 and 2011. Stuart Raftus, chief administration officer of Vancouver-based Canaccord Genuity Group Inc. and president of Canaccord Genuity Wealth Management (Canada), is a director on the board.
"I'm immensely proud to be a part of this highly experienced leadership team," says Throop in a statement released Tuesday. "Sphere has excellent depth of talent and experience across ETFs, portfolio management, investment research, sales and marketing. We look forward to changing the ETF landscape."
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