Evolve Funds Group has launched three new exchange traded funds (ETFs) on the Toronto Stock Exchange – the Evolve US Banks Enhanced Yield ETF (CALL); the Evolve Active US Core Equity ETF (CAPS); and the Evolve Active Short Duration Bond ETF (TIME).
CALL seeks to replicate, to the extent reasonably possible before fees and expenses, the performance of the Solactive Equal Weight US Bank Index Canadian Dollar Hedged, while mitigating downside risk. CALL invests primarily in the equity constituents of the Solactive Equal Weight US Bank Index Canadian Dollar Hedged, while writing covered call options on up to 33 per cent of the portfolio securities, at the discretion of the Manager. The level of covered call option writing may vary based on market volatility and other factors.
“CALL seeks to provide investors with both upside potential and enhanced yield in a low rate environment,” says Kirk Cooper, Chief Investment Officer at Evolve Funds. “We believe the fundamentals for large US banks are positive; they generally have excess capital, dividend payments have been increasing, and we believe they could benefit from any tax and regulatory changes in the US In our view, active management of covered calls strikes a balance between generating yield and participating in any potential upside performance of the sector.”
CAPS seeks to provide holders of units with long-term capital appreciation by investing primarily in equity securities of US listed large-capitalisation companies using a selection process that combines quantitative techniques, fundamental analysis and risk management. Evolve Funds has retained Nuveen Asset Management, LLC (“Nuveen”) to act as sub-advisor for CAPS.
Nuveen utilises an investment process that combines quantitative techniques, fundamental analysis and risk management. The lead senior portfolio manager that will be principally responsible for CAPS is Bob Doll, a chief equity strategist at Nuveen. Bob manages Nuveen’s Large Cap Equity Series, which includes traditional large cap equities, specialty categories and alternative strategies. He is a highly respected authority on the equities markets among investors, advisors, and the media. As the author of widely-followed weekly commentaries and annual market predictions, Bob provides ongoing, timely market perspectives.
TIME seeks to provide holders of units with a high level of current income through monthly distributions. Under normal market conditions, TIME invests primarily in a diversified portfolio of below investment grade corporate debt securities rated “BB+” or lower by Standard & Poor’s Rating Services and Fitch Ratings or “Ba1” or lower by Moody’s Investor Services, Inc. at the time of investment. The portfolio will generally have an average duration of less than three years. Evolve Funds has retained Nuveen to act as sub-advisor for TIME.
Nuveen employs a bottom-up approach that focuses on credit analysis and relative value. Nuveen seeks to identify securities across diverse sectors and industries that it believes are undervalued or mispriced.
“Active ETFs have been one of the fastest growing segments of the Canadian ETF industry,” says Raj Lala, President & CEO at Evolve Funds. “This segment currently makes up approximately 15 per cent of ETF AUM, but is trending upwards. In fact, this year there have been more sales in Active ETFs than all of 2016. Accordingly, we are very pleased to partner with Nuveen as sub-advisor for these active strategies. Nuveen’s disciplined approach to active management is driven by integrated research and risk management processes.”