With Wise ETFs, Desjardins finds the “sweet spot”

New portfolios let advisors expand their offerings

With Wise ETFs, Desjardins finds the “sweet spot”

New portfolios let advisors expand their offerings

As ETFs increase in popularity, advisors face a challenge. How do you sort through the growing number of offerings?

“We think we’ve found a sweet spot,” says Rodrigue Babin, a senior product manager at Desjardins Investments Inc.

Babin oversees Desjardins’ new Wise ETF Portfolios. They’re innovative, yet simple, he says. The Wise ETF Portfolios are mutual funds that contain ETFs and have a strategic beta component. Desjardins is an early adopter of this type of product, which opens the door to many investors.

This product offers six portfolios, ranging from 100% fixed income to 100% equities, with various mixes in between (see “The Wise ETF Portfolios Lineup”). The underlying ETFs include the identical underlying assets. Only the weights differ. So each portfolio benefits from the same careful selection, aimed at improving the risk/return ratio.

The Wise ETF Portfolios use tactical asset management. Instead of relying on a systematic rebalancing, Desjardins’ portfolio managers have some leeway to reallocate. That means, the funds can take advantage of market trends. For clients, the funds reduce the cost of ongoing maintenance and transactions.

Added value also comes from Desjardins’ partnership with Scientific Beta. Securities are picked based on factors that, over time, have proven to have value over a market-weighted index.

ETFs now hold $185.9 billion in assets

In the ETF market, it’s not always easy to stand out from the crowd. According to the Canadian ETF Association (CETFA), advisors now have access to 729 funds (from 38 ETF providers), which hold $185.9 billion in assets. 1

These products are clearly in demand. By understanding the attitudes of clients, as well as the prospects regarding ETFs, advisors can better deliver what their clients need.

A CETFA study2 noted that ETF investors are much more financially literate than other investors. There’s also a strong link between advised investors who own ETFs and financial expectations being met. ETF investors, more than others, tend to say they’re well ahead of where they expected to be financially.

The study also found that ETF investors like low MERs (management expense ratios), diversification in a simple product, and something that delivers performance and is easy to understand.

The Wise ETF Portfolios fit the bill. Babin describes the products as a “one-ticket solution.” Advisors can offer a diversified product that lets clients buy market exposure at a relatively low cost. The potential performance aims to be close to pure market returns but provides some peace of mind for investors. The Wise products also have some of the lowest management fees on the market for ETF portfolio solutions.

A turnkey investment

Babin calls the Wise ETF Portfolios a streamlined and sophisticated turnkey investment. The makeup of the products resulted from strategic portfolio management by the team at Desjardins Global Asset Management Inc.

“The portfolios follow a core-plus strategy, with the bulk of the assets being invested in large well-recognized passive indices,” says Babin.

He says the price point for Wise ETF Portfolios is like passive offerings, with added elements of value.

The portfolios are backed by the strength of the century-old Desjardins Group, the largest co-operative financial group in Canada and sixth largest in the world. Desjardins Investments Inc. has become one of Canada’s leading fund manufacturers, with $30 billion in assets under management. 

To Babin, the Wise ETF Portfolios fill an appealing niche. Many older ETF portfolio offerings are passive, and some newer offerings rely on factor-based approaches to resemble more of an actively managed product.

“The Wise funds strike a balance between the two, which we feel will resonate with advisors and clients alike.”

With the choices available to suit different types of investors, advisors can expand their product offerings, achieve better potential returns, and suit the growing hunger for ETFs.

“We bring access to ETFs from a number of recognized manufacturers, as well as a compelling strategic beta advantage—all in one simple and affordable package,” says Babin.

The Wise ETF Portfolios Lineup

The six products have different proportions for clients with different goals and risk tolerances. The same underlying positions, about 15, are spread over 11 sub-asset classes.

  • Wise Fixed Income ETF Portfolio (100% fixed income)
  • Wise Conservative ETF Portfolio (20% growth, 80% fixed income)
  • Wise Balanced ETF Portfolio (40% growth, 60% fixed income)
  • Wise Growth ETF Portfolio (60% growth, 40% fixed income)
  • Wise Maximum Growth ETF Portfolio (80% growth, 20% fixed income)
  • Wise 100% Equity ETF Portfolio (100% growth)

Rodrigue Babin, senior product manager, Desjardins Investments Inc

For more information, visit desjardinsfunds.com/wiseetf.

[1] All figures as of Aug. 31, 2019: http://www.cetfa.ca/files/1568654350_NEW-%20CETFA%20August%202019.pdf
[2] “Know Your ETF Investor”: http://www.cetfa.ca/files/1556552714_Infographic%20-%20Core%20User%20V4.pdf

The Desjardins Funds are not guaranteed, their value fluctuates frequently, and their past performance is not indicative of their future returns. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The Desjardins Funds are offered by registered dealers