Toronto-based Hamilton Capital Partners Inc. is launching of Hamilton Capital Canadian Bank Dynamic-Weight ETF (HCB), the company announced Friday.
HCB seeks long-term returns consisting of long-term capital growth as well as regular monthly dividend income by investing in an equity portfolio of Canadian banks. HCB will employ a rules-based “mean reversion” portfolio rebalancing methodology to improve the return potential of the ETF.
Units of the ETF will begin trading on Tuesday, Oct. 2, on the Toronto Stock Exchange (TSX).
The fund provides exposure to one of highest quality banking sectors globally, the company says in a news release, which has a long history of delivering attractive returns and strong dividend growth. HCB’s monthly rebalancing strategy is designed to capitalize on the historical mean reversion tendencies of the sector and to generate higher long-term returns while reducing the overall risk of the portfolio.
“The mean reversion tendency of the Canadian banks is one of the most written about themes in Canadian bank investing. We are excited to launch HCB and thereby provide investors with a low cost, efficient vehicle to potentially achieve higher returns, increased diversification, and most importantly reduced risk during periods of market stress, as the benefits of mean reversion have historically been greatest during times of elevated market turbulence,” explains Rob Wessel, managing partner of Hamilton Capital, in a statement.
HCB will seek to achieve its investment objective by applying a dynamic re-weighting strategy to a portfolio of the six largest Canadian banks. Each month, the portfolio will overweight the three most oversold banks from the prior month and underweight the three most overbought.