ETF TV News #83 Nirujan Kana, Vice President, ETF Strategy at CI Global Asset Management discusses the growing demand for Active ETFs

[00:00:03] Presented by Syntax Advisers. [00:00:04][1.1]

Margareta Hricova: [00:00:07] Welcome to ETF TV – your insight into the world of exchange traded funds, issuers and investment. I’m Margareta Hricova, and joining me today is Deborah Fuhr of ETFGI and Nirujan Kanagasingam, Vice-President of ETF strategy at CI Global Asset Management. [00:00:22][14.6]

[00:00:22] Welcome. [00:00:22][0.0]

Nirujan Kangasasingam: [00:00:24] Thank you very much, Margareta. Pleasure to be here. [00:00:25][1.8]

Deborah Fuhr: [00:00:26] Thank you. [00:00:26][0.0]

[00:00:27] So Nirujan, in the region last week, you listed two new ETFs in Canada. Can you tell us a bit about those products? [00:00:31][4.4]

Nirujan Kangasasingam: [00:00:33] So two strategies that we launched were very distinct, but both strategies really do help address clients changing needs and wants. So the first strategy is the CI Alternative North American Opportunities Fund, goes by the ticker symbol, CNAO, and this is a liquid alternative strategy that provides exposure to innovative and growing companies in North America within the liquid alternative structure. So it gives the manager the flexibility to use tools such as short-selling, options trading with really the goal of enhancing returns, hedging risk, or a combination of both. [00:01:08][35.2]

[00:01:08] And the second strategy we launched was the CI Global Climate Leaders Fund with the ticker symbol CLML, and this is managed by Munro Partners out of Australia. And this strategy provides global concentrator portfolio of companies and invest in companies that are best positioned to champion and win from this structural change that is decarbonization and climate change. And we’re really excited about the opportunity within the space. We think it’s arguably the biggest opportunity, investment-wise since the Internet. And we’re thrilled to have a leading investment management platform overseeing this product and we’re very excited that we’re offering two actively manage strategies within the ETFs wrapper. [00:01:49][40.9]

Margareta Hricova: [00:01:51] Which investors do you expect to use these ETS and how will they use them? [00:01:54][3.2]

Nirujan Kangasasingam: [00:01:55] We really do see there being demand from both advisors and investors. So with respect to CNAO, the liquid, alternative structure itself is relatively new in Canada. But we really started to see advisors start embracing them and the investors as well, and really for diversification purposes, the flexibility that these mandates offer. And I expect that as investors get more comfortable with these strategies and some of these strategies start to gain more track record performance-wise, I think we’ll start to see more demand for this. [00:02:26][31.6]

[00:02:28] And when it comes to the Climate Leaders Fund, we know there’s been a proliferation of ESG ETFs globally and in Canada as well. And we’re starting to see demand follow suit as well. So far in 2021, we’ve already seen more money go into ESG products here in Canada than all of 2020 itself. But it’s still very early innings and we still have a lot of catching up to do, especially with Europe. And it’s going to take anywhere from 30 trillion to 70 trillion dollars, it’s estimated to move to a net zero global economy. The opportunity is massive and we think it’s too large to be ignored by both advisors and investors. And we really do see there be demand from all channels [00:03:07][38.9]

Deborah Fuhr: [00:03:08] When you think about the evolving space for ETFs in Canada, how do you see that moving forward, especially as you’ve just brought out two active products and know activities more prominent in Canada than any other market. Can you talk a bit about that? [00:03:20][11.6]

Nirujan Kangasasingam: [00:03:20] The biggest change I probably see is the move away from beta products. And as you know, the Canadian ETF industry and really globally, beta products or passive products or however you classify it, really make up the lion’s share of the market. The last decade has really been conducive to beta markets as well. We’ve had perpetually declining interest rates, strong global growth and beta products have done well. [00:03:43][23.0]

[00:03:44] But I think we’re at a period where markets are starting to shift and there’s a tremendous opportunity in alpha-generating products, whether it’s factor-based type of strategies or actively manage strategies. So I do see investors embracing these strategies more, especially this year we’ve seen a significant uptick in actively managed ETFs. And specifically actively manage fixed income ETFs, in such a low yield environment, we’re starting to see a lot of money go into yield enhancing products, whether it be a covered call type of strategy. And investors have really started embracing alternative types of strategy as well. We’ve seen all the money that’s gone into crypto, so I think that trend will continue as we move forward as well. [00:04:23][39.3]

Margareta Hricova: [00:04:24] And what are your plans for the rest of 2021? [00:04:26][2.7]

Nirujan Kangasasingam: [00:04:27] It’s already been quite a busy year for us here at CI. We’ve listed seven ETF strategies, including the Bitcoin ETF, the Ethereum ETF and Canadas lowest cost gold ETF. And over the next couple of months, we have eight ETFs coming out, so we have another liquid alternative fixed income strategy and that’s going to be managed by our team at Marret Asset Management. We also have a suite of beta ETFs coming out that are designed to help round out our ETF shop and really provide you any ETF ranging from pure, plain vanilla beta to actively managed ETFs. [00:04:59][32.1]

[00:05:00] And then lastly, we have two more actively managed ETFs coming out, one targeting the emerging market space and the other one targeting the global innovation space. And these strategies will be managed by our team at CI Global Asset Management. One of the perks of being part of a large global asset management firm is that we get to leverage the skills and expertize of our active management team and really bring you those strategies in an ETF vehicle. Its the best of both worlds. [00:05:26][25.6]

Deborah Fuhr: [00:05:27] That’s great. Thank you so much for that update. [00:05:28][1.6]

Nirujan Kangasasingam: [00:05:29] Thank you very much, Deborah. [00:05:30][0.7]

Margareta Hricova: [00:05:31] Deborah, can you tell us about some of the other news highlights in the industry last week? [00:05:35][4.1]

Deborah Fuhr: [00:05:36] Last week, there were 30 new listings, so a relatively light week compared to some of the others. [00:05:40][4.4]

[00:05:41] 20 issuers brought products to market. They were listed on 11 exchanges and there were 19 new cross-listings. The strategies were similar to the rest of this year where it was ESG, it’s been thematics. [00:05:51][10.5]

[00:05:52] What I think I’d like to highlight is the amazing first half of the year we’ve had. So we’ve been able to clean the data, and what we see is the global ETF industry has reached a new record of 9.35 trillion US dollars, and the flows globally have been 660.7 billion dollars, which is also a record. [00:06:12][19.5]

[00:06:12] When we look at the year to date flows, we can see that it’s significantly higher than this point last year, which was 293 billion. All of last year gathered 762 billion. So we’re very close to what we gathered all of last year. And if we were to look at the past 12 months, we would see that the ETF industry globally has gathered over a trillion dollars and we’ve had 25 months of consecutive net inflows. Most of the money has been going into equity ETFs where we’ve seen a record already; 460 billion of net inflows going into equity ETFs in the first half of the year. [00:06:50][38.3]

[00:06:51] If I turn to the US, we’ve also seen records there. So the ETF industry in the US has reached a record 6.9 trillion US dollars. The net inflows are 472 billion. If we were to compare the inflows so far this year to all of last year, we’re just 18 billion dollars short of the full year flows last year, which were a record. We’ve had 23 months of consecutive net inflows and we’ve seen that equity ETFs, just like globally, are the primary source of where the money is going. [00:07:22][30.5]

[00:07:23] And when we look at Europe, we’ve seen that the ETF industry has reached a record of 148 trillion US dollar, 112 billion of net inflows, just eight billion dollars short of the full year flows all of last year. So we’re really off to a very strong first half of the year. I envision that this will continue throughout the rest of the year and I look forward to seeing how those numbers play out. [00:07:46][22.9]

Margareta Hricova: [00:07:46] Thank you for that, Deborah, and thank you to our sponsor, Syntax Advisors, to Nirujan and to you for watching. To watch prior episodes and to see news from the ETF industry, visit ETFTV.NET. Thank you. [00:07:59][12.8]

[00:08:07] ETFT TV News does not provide investment advice nor recommend products. [00:08:07][0.0]


Published on July 20, 2021