AGF taps the zeitgeist with infrastructure and ESG listings
Toronto-based AGF Investments is listing two new actively managed ETFs that have their finger on the zeitgeist. They are:
- AGFiQ Enhanced Global ESG Factors ETF (QEF)
- AGFiQ Enhanced Global Infrastructure ETF (QIF)
QEF will use a model to evaluate and rank global companies based on ESG factors. The model will also assess other factors, including growth, value, quality and risk as “control variables,” the prospectus says. While QEF’s investments are selected based on its model, the fund's manager will build in controls – like caps on country and sector – that help reduce risk and enhance diversification. AGF anticipates that the fund will be rebalanced monthly, “but has the latitude to rebalance on an ad hoc basis should market conditions dictate,” the prospectus says.
QIF is much the same, only it removes the ESG screen and targets global infrastructure companies. I could find no elaboration on how the infrastructure sector is defined.
The annual management fee for both funds is 0.45%. According to the prospectus, a third listing, the AGFiQ Enhanced Core Global Multi-Sector Bond ETF, is in the pipeline.
Analysis – exchanges and ETFs
What’s perhaps most interesting about these listings is where they’re taking place. Both funds are being listed on the NEO Stock Exchange rather than on the Toronto Stock Exchange, which is the biggest exchange in Canada. The NEO stock exchange was created in 2015 and was designed to eliminate “predatory” market behaviours like high frequency trading, while providing free real-time market data to help with transparency. The exchange has the backing of major global banks, including the Royal Bank of Canada and Barclays.
NEO has proved popular with ETF issuers. Scrolling down the exchange’s listings, most of the products are ETFs. It’s appeal to issuers likely owes to its cheaper listing fees. Exchanges love ETFs because they provide a stream of new listings each of which comes with a listing fee (unlike public companies, whose stocks are usually only listed once). Lower exchange fees then allow ETF issuers to charge lower management fees and help grow AUM. For example, Australia has higher management fees than the US because the ASX is more expensive to list funds on. As well as issuers, market makers may like NEO because it provides free data and gets rid of high-frequency traders. The BATS exchange, the US ETF specialist exchange, is known for its relationship with high-frequency traders.
Mirae lists covered call ETF
One of Asia’s largest ETF issuers Mirae Asset is listing a new covered call ETF in Seoul, the Mirae Asset TIGER 200 Covered Call ATM ETF (289480). 289480 will track the performance of the KOSPI 200 Covered Call ATM Index.
Cathay Pacific lists Asian bond ETFs
Cathay Securities is listing a new fixed income ETF, in a sign that fixed income products are growing their footprint in East Asia. The Cathay EM USD Investment Grade ex China Coupon 5.5% 5Yr+ 10% Country Capped ETF (00726B). The fund – which has an extremely long and self-explanatory name – will track investment grade EM debts denominated in US dollars. Chinese entities are excluded from the list of eligible debt issuers. Its index is the Bloomberg Barclays EM USD Investment Grade ex China Coupon 5.5% 5Yr+ 10% Country Capped Index, which appears to be built for this ETF.