First Asset Investment Management has launched two new equity exchange-traded funds replicating Morningstar US equity indices on the Toronto Stock Exchange (TSX).
First Asset Morningstar US Momentum Index ETF (YXM) and First Asset Morningstar US Value Index ETF (XXM) replicate indices that apply Morningstar CPMS rules-based methodologies that are similar to those used in both First Asset Morningstar Canada Value Index ETF (FXM), which has a 28.8 per cent one-year return and First Asset Morningstar Canada Momentum Index ETF (WXM), which has a 17.9 per cent one-year return.
Canadian investors will now be able to tap into the breadth, depth and diversification potential of the US market with these offerings that have been designed to replicate, to the extent possible, the performance of the Morningstar US Momentum Target 50 Index and Morningstar US Value Target 50 Index, as applicable, net of expenses.
YXM has been designed to provide diversified exposure to the top 50 US-based equities that demonstrate, among other things, positive momentum in earnings and price. XXM provides diversified exposure to the top 50 US-based equities that are, among other things, considered to be “good value” based on characteristics like low price-to-earnings and low price-to-cash flow ratios.
These ETFs will be denominated in Canadian dollars but will be offered in hedged and un-hedged versions to provide investors with the flexibility to choose whether they want exposure to the US currency. These ETFs will also offer Advisor Class units in both hedged and un-hedged versions.
“As a result of the success of our First Asset Morningstar Canada Value and Canada Momentum Index ETFs launched last year, investors have been asking us to deliver US equivalents that leverage the same proven methodologies and strategies,” says Barry Gordon, president and chief executive of First Asset. “At First Asset, we are committed to developing solutions that aim to deliver superior risk-adjusted returns, and we are pleased to add these US Equity ETFs to our product portfolio.”
“We are delighted to expand our relationship with First Asset by licensing the Morningstar US Momentum and US Value Indexes for exchange-traded funds,” says Sanjay Arya, head of Morningstar Indexes. “These indexes incorporate the highly regarded investment research of Morningstar CPMS, an equity research platform that has served investment professionals for almost 30 years.”
