BMO Global Asset Management is set to launch four actively managed exchange-traded funds mimicking investment strategies already sold through its mutual fund division.
“After much exploration, we decided that the market is now ready for actively managed ETFs,” says Kevin Gopaul, head of BMO Global Asset Management Canada, in an interview with The Globe and Mail.
Mr. Gopaul says the bank has already received regulatory approval for the ETFs and expects to launch all four by the end of May. They include three fixed-income funds and one global equity fund that the bank already sells to investors in a mutual fund offering.
The ETFs are: BMO Women in Leadership Fund (WOMN), BMO Global Multi-Sector Bond Fund (ZMSB), BMO Core Plus Bond Fund (ZCPB) and BMO Global Strategic Bond Fund (ZGSB).
Management fees for the four funds range from 0.35 per cent to 0.73 per cent, and each fund will hold similar investment objectives as its mutual fund counterparts.
Last month, Mark Raes, head of ETF business development at BMO Global Asset Management, told The Globe and Mail that active fixed-income was an area the asset manager was currently exploring, specifically in the global fixed-income space.
“As people look more to global fixed-income exposures, I think having active ETFs is going to be a valuable part of the marketplace,” Mr. Raes said in an interview. “A lot of people and institutions feel more comfortable making allocation decisions within the domestic or the North American market, but once you branch out to global fixed-income, you are starting to step outside some people’s area of comfort or expertise, and therefore having an active manager can help with those decisions.”
Mr. Gopaul said the addition of WOMN to the initial active ETF launch – a global equity fund that uses an impact investing strategy to screen for a gender-diverse leadership environment within companies – was driven by investor demand for the fund in an ETF package.
The mutual fund series of WOMN was launched in 2016 and currently has more than $31-million in assets under management. Whether BMO will launch any further mutual fund products in an ETF format has not been decided as of yet, Mr. Gopaul said.
Actively managed fixed-income ETFs have been attracting investment dollars with approximately $11-billion now sitting in assets. The sector now represents 22 per cent of the total fixed-income ETF assets in Canada and 7 per cent of total Canadian ETF assets as of the end of April, 2018, according to data provided by National Bank Financial.
Earlier this week , Franklin Templeton Investments Canada launched three actively managed fixed-income ETFs: Franklin Liberty Global Aggregate Bond ETF (CAD-Hedged) (FLGA), Franklin Liberty Senior Loan ETF (CAD-Hedged) (FLSL) and Franklin Liberty U.S. Investment Grade Corporate ETF (CAD-Hedged) (FLUI).
With management fees that range from 0.35 per cent to 0.45 per cent, the funds will be managed by the Franklin Templeton Fixed Income Group. Along with the Franklin Liberty Canadian Investment Grade Corporate ETF (FLCI), Franklin will now offer four fixed-income ETFs that invest in Canada, the U.S. and globally.
“The fixed-income market is becoming increasingly more complex in this low interest rate environment,” said Duane Green, president and CEO, Franklin Templeton Investments Canada.