Toronto-based AGF Management Ltd. is the latest mutual fund provider planning to enter the exchange-traded funds (ETFs) business. The firm has filed a preliminary prospectus to launch seven ETFs within two suites, according to a new research report from National Bank Financial Ltd., and confirmed by AGF.
The four ETFs in the first suite will use a proprietary quantitative model to screen equities from respective regions. The model will employ a minimum variance approach to reduce portfolio volatility and will select securities based on factors that identify growth, value, quality and risk characteristics, the NBF report states.
London, Ont.-based Highstreet Asset Management Inc., an AGF subsidiary, will manage all four funds — QuantShares Enhanced Core Canadian Equity ETF, QuantShares Enhanced Core US Equity ETF, QuantShares Enhanced Core International Equity ETF and QuantShares Enhanced Core Emerging Markets Equity.
Boston-based asset management and ETF strategy firm FFCM LLC, of which AGF acquired a majority stake in late 2015, will subadvise and actively manage the second suite of ETFs. Each of the three ETFs in this suite will invest in a portfolio of other ETFs to gain the desired exposures, according to the NBF report.
The three ETFs in this suite include:
>QuantShares Global Equity Rotation ETF, which will systematically create a broadly diversified portfolio of regional, sector, and country ETFs to access equity risk premia, such as value, momentum, and size based on factor rankings across the global equities market. Its objective is to outperform the MSCI all country world total return index.
>QuantShares MultiAsset Allocation ETF, which will provide diversified exposure to all global equity markets, major components of the fixed income markets, and alternatives by investing in ETFs. This strategy tactically reweights ETFs with the aim of reducing risk and drawdowns.
>QuantShares MultiAsset Income Allocation ETF, which will invest in index-based ETFs that provide high-income streams and show low correlations to each other. The strategy also tactically reweights ETFs with the aim of reducing risk and drawdowns.
“AGF is pleased to confirm that we will be launching two suites of ETF offerings in early 2017 through QuantShare Advisor,” says Jay Bhutani, senior vice president, head of ETF strategy, with AGF in an e-mailed statement. “Building on AGF’s nearly 60 year history of innovation, QuantShare Advisor is an exciting new collaboration powered by a diverse, multi-disciplined team that leverages the complementary strengths of investment professionals from Highstreet Asset Management and FFCM .”
In an interview that Investment Executive conducted with Blake Goldring, AGF’s chairman and CEO, earlier this year, he said that the firm was looking to enter the ETF business by drawing upon FFCM’s and Highstreet’s expertise.
“FFCM’s creativity in developing products, combined with Highstreet’s quantitative expertise, give us an ability to create interesting products for the Canadian market,” Goldring said.
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