Horizons ETFs Management (Canada) Inc. and its affiliate, AlphaPro Management Inc. – jointly known as "Horizons ETFs" – have reached assets under management exceeding $3 billion for their actively managed ETF business. The company currently has 28 actively managed ETFs on the TSX, giving it the largest suite of actively managed ETFs in Canada, in terms of number of offerings.
While active ETFs are similar to most actively managed mutual funds in Canada, they typically have lower management fees than most mutual funds and can trade intra-day on the TSX.
"We launched our first actively managed ETF in 2009, when the ETF industry in Canada was exclusively index-focused," said Steve Hawkins, president and co-CEO of Horizons ETFs Management (Canada) Inc. "It's very gratifying to see that actively managed ETFs have started to gain such widespread acceptance amongst Canadian investors. In fact, with more than $14 billion invested in this ETF category, Canada has the highest proportion of actively managed ETF assets in the world."
ETF inflows seem to primarily benefit those following income-focused strategies, both globally and in Canada. Fixed income investments have less market liquidity and availability compared to equity investments. This is problematic for index strategies, which cannot own all the underlying securities in a fixed-income benchmark, or can impact valuations when the fund or ETF rebalances its exposure. Actively managed income strategies also entail independent credit analysis on the issues they hold, which makes for better protection.
There is also growth in the launch of actively managed multi-growth strategies, which are ETFs whose actively managed asset allocation strategy can only gain access to underlying asset classes by investing in other ETFs.
"Given the popularity of active income strategies, our largest proportion of actively managed ETFs are those income-focused mandates sub-advised by Fiera Capital, one of Canada's leading fixed income asset managers,” said Hawkins. “However, we are seeing strong growth across our entire suite of actively managed ETFs… Investors are embracing the concept that ETFs that use active management, when combined with low management fees, can be a winning proposition, regardless of which asset class or investment strategy you invest in.”
Horizons announces new currency-hedged ETFs
RBC GAM launches income-oriented ETFs