Larry Berman: A dispatch from 'Inside ETFs' 2020
For the eighth year running, I’m writing to you from “Inside ETFs,” the largest exchange-traded funds conference in the world, in South Florida. It’s a conference to attend for anyone interested in ETFs. This conference brings together the who’s who in the ETF industry for a lively discussion on the evolution of ETFs. One of my favourite sessions is always the “People’s Choice Award” for the best ETF of the year. The best ETF is not always the one with the best performance or the highest asset growth. A few years ago we featured a winner of this award, the SSGA Gender Diversity ETF (SHE). Today that ETF has about $143 million in assets and has done an okay job tracking the S&P 500, but has underperformed in the recent “melt-up” months.
Active ETFs are amongst the biggest growth areas along with thematic investing trends like ESG (Environmental, Social, and Governance).
Last year, we introduced viewers to defined-outcome ETFs from www.innovatorETFs.com as a way to stay invested without worrying too much about market volatility.
One ETF that I have added recently to my sleep-at-night portfolios is the AGFiQ US Market Neutral Anti-Beta ETF (QBTL on the TSX or BTAL on the NYSE). It’s up for a “People’s Choice Award” this year at the conference. The ETF tracks an index that is long 100 per cent of the best low-beta stocks and short 100 per cent of the most expensive highest-beta stocks. It offers an “anti” beta or negative market risk exposure, but is theoretically market neutral being long 100 per cent and short 100 per cent. The U.S. version has been out since September 2011. Since then, it has basically made no money, which tells you it’s not a buy-and-hold strategy. But in a challenging environment where markets are overvalued, it offers some upside potential.
I’ve paired the ETF with a great new offering from BMO, the BMO Premium Yield ETF (ZPAY). It is designed to find the best high-quality stocks in the U.S. market and write puts and calls on these companies to generate about a six-per-cent-plus yield. Purpose Investments offers a similar strategy with its Purpose Premium Yield Fund (PYF), which I’ve often recommended for higher-yield seekers who are looking for a smoother portfolio experience. Over the past two years, we’ve seen that combining ETFs smooths out returns.
Our upcoming spring roadshow will focus on how to include more active-based ETFs in your portfolio. From ESG and defined outcome to alternative (long/short), each more-active style has its place. Millennials may prefer to tilt their portfolios towards more environmentally-friendly products, whereas more risk-adverse investors may like defined outcomes while those who more adventurous may seek to make money in adverse conditions with alternatives. Come out to see how these new and growing areas of ETFs can be included in your portfolios. As always, we ask for a voluntary donation in support of dementia and Alzheimer’s research at the Baycrest Hospital to attend. We have raised more than $500,000 in the past decade thanks in part to BNN Bloomberg viewers and a matching donation from yours truly.
|Halifax||March 18, 2020|
|Montreal||March 19, 2020|
|Ottawa||March 21, 2020|
|Saskatoon||March 24, 2020|
|Winnipeg||March 25, 2020|
|Toronto||April 5, 2020|
|London||April 14, 2020|
|Waterloo||April 15, 2020|
|Newmarket||April 19, 2020|
|Edmonton||April 22, 2020|
|Calgary||April 25, 2020|
|Kelowna||May 5, 2020|
|Victoria||May 6, 2020|
|Vancouver||May 9, 2020|