Deborah Fuhr: Welcome to ETF TV, I’m Deborah Fuhr. Today we’re welcoming Trevor Cummings, vice president of ETF distribution for TD Asset Management, to the show to talk about a launch they did last week on a global health care leaders ETF. Trevor, welcome.
Trevor Cummings: Thanks, Deborah. Great to be here.
Deborah Fuhr: Can you tell us a little bit about this new ETF that you launched last week, please?
Trevor Cummings: This is sort of maybe a second of a series for us. We’ve launched a global health care index ETF, it’s a lowest cost in our Canadian marketplace. And I think it’s most beneficial to think of this in terms of: why would you want health care? Why would you want health care now? And what did we do about it to try to innovate the space? And I think the first thing about health care really is demographics for sure; there’s an aging population, certainly in Western Europe, in North America and Japan fx, and that really puts sort of a tailwind into health care expenditures for probably the next two decades and beyond.
I think the other element to it is that health care is the second largest sector. If we use the S&P 500 as a proxy, a 70/30 portfolio, neutral weight to health care is about 10% now. And so we wanted to create a solution that could address that problem. The thing about health care today is that there’s much more of a total addressable market than there was 25 or 30 years ago. Now there’s genetics, there’s biotechnology, there’s medical devices and diagnostics, there’s services like remote health care services that are definitely coming on stream. So we wanted to make an ETF that really accounted for all of the new parts of health care, that was global, and that gave people an opportunity to address a part of the market that they might not have enough of in portfolios.
Deborah Fuhr: Would you classify this as a sector or thematic ETF?
Trevor Cummings: I think what we call it here at TD Asset Management is special focus, which is kind of maybe in between the two. This isn’t quite a narrow category like I think has proven very popular over the last couple of quarters. We think this is something that you could buy in a portfolio or allocate to in a portfolio and keep for many, many years. I think there are definitely some strategic asset allocators that could use a solution like this in order to be very, very precise in building a model or building a portfolio. And there’s probably going to be some others who are tactical, who want to find mispriced assets or look for opportunities, but maybe just don’t want to bear security-specific risk. So it’s kind of a middle of the road between the two
Deborah Fuhr: And how does TD Asset Management think about which products you’ll offer as ETFs and which you’ll offer as mutual funds?
Trevor Cummings: It’s an interesting question, I think for now what we’re doing on the ETF side of the business is, we’re launching additional solutions that are not carbon copies to what we do on the mutual funds side. We’re an asset manager, we’re not a funds company. And so really, I think what we’re trying to deliver to the marketplace is an increased menu, a wider breadth of solutions. And so really the decision isn’t, ‘do we mirror or carbon copy our mutual funds with an ETF share class?’ It’s more about, ‘what’s going on in ETFs right now in Canada? And can we develop something that innovates or addresses maybe some shortcomings with the products that are already out there, in order to deliver value to our end users, to our investors?’
Deborah Fuhr: And who do you see as your end users or investors in your ETFs?
Trevor Cummings: Everyone, I would say. Definitely investment counselors, sort of the RIA-type channel here in Canada, the independent boutiques have given us a lot of early support. Retail, financial advisors, investment advisors, discretionary portfolio managers for sure. I think what’s started to happen more recently, and it’s definitely welcome for us, is do-it-yourself or individual investors are also starting to use our ETF solutions. We have some one-ticket solutions as several other firms do. And we have these ETFs that for the most part, again, are trying to be a little bit different, and the market likes that. We crossed six billion dollars in assets last week. So we’re doing something right and we’re getting support from a large swath of the investing public.
Deborah Fuhr: What are your areas of focus for the rest of 2021?
Trevor Cummings: I think we’re going to do more of the same, which is to say that in the last several years, really starting with our technology ETF, or our global dividend ETF, the health care ETF, a lot of what we do is we take a look at the ETF landscape, and we sort of try to ascertain whether or not there’s any challenges or any potholes, if you will. And then we also ask ourselves, can TD Asset Management bring anything to the table? Is there a skill set or an investment process that we can sort of borrow or port over from our hedge funds or mutual fund offering into the ETF space? And that’s really what we do here, and that’s what I think we’re going to continue to do through the rest of 2021 and beyond.
Deborah Fuhr: Great. Thank you so much for joining us today.
Trevor Cummings: Appreciate it. Thanks again, Deborah.
Deborah Fuhr: When we look at the other news, we had 18 new ETF listings last week, which is actually much smaller than we’ve seen in the prior few weeks, but we did see significantly more cross-listings; 78 cross-listings happened last week. So interesting to watch the trends that are happening. When we look at the listings, there were 13 issuers that listed products. They were on 10 different exchanges. 11 were equity, four were digital assets, three were fixed income, and six were ESG, and of course, we had thematics in there and a couple more focused on China. When we look at the digital space, we’re seeing that this is definitely an area of interest. We know that this coming week there’s more products coming to market and many firsts.
We’ve seen products from CoinShares on XRP. We had Litecoin, we had Bitcoin inversed launched in Canada last week, so that’s the first inversed product in Canada. We also saw that the ESG products that Legal & General has here in Europe have moved to ESG within smart beta or dividend’s, so we see ESG expanding into what it’s doing.
The other things I’d like to touch on would be that if we look at the flows through Q1 or end of March, the ETF industry has reached a new record of 8.56 trillion dollars. The flows for the month are 136 billion, which is the second highest, monthly inflows ever. On a Q1 basis, the flows are 359 billion, which is an all-time record. The prior record was 179 billion, so significantly higher. And if we look at new listings, there were 371 new listings in Q1, which is a record.
Where we look at the flows, what we’ve seen is the equity products took in 113 billion. Year-to-date it’s at 274. If we look at fixed income, it took in 11, year-to-date is 33. Commodities actually have had net outflows for the month of -7, and year-to-date it’s -6. And when we look through active ETFs, we’ve seen, 13 billion of net new for the month and 47 year-to-date. ESG has had 15, year to date 57. Thematic has had just 2.6 for the month, but 45 on a year-to-date basis. And digital assets year-to-date has taken in 1.6 billion. So we’re seeing significant interest there off of a very small base, I would have to say.
So, I would like to thank you for watching. If you’re interested in more details on the things that are happening on a weekly basis. Go to www.ETFTV.net and sign up for our weekly newsletter that we send out, and I look forward to seeing you next week. Thank you.