Brompton Funds Limited has launched three new actively-managed ETFs on the Toronto Stock Exchange. The ETFs will seek to hedge substantially all of their direct foreign currency exposure back to the Canadian dollar.
Brompton Flaherty & Crumrine Investment Grade Preferred ETF (BPRF) invests in an actively-managed portfolio consisting primarily of preferred and income-producing corporate securities, including traditional preferred stock, trust preferred securities, hybrid securities that have characteristics of both equity and debt securities, contingent-capital securities, subordinated debt, and senior debt of North American issuers or of Canadian or US dollar-denominated securities of global issuers. BPRF will primarily invest in securities that are rated Investment Grade, with at least 75 per cent of BPRF’s portfolio comprised of investment grade securities at the time of any new investment. BPRF’s targeted distribution rate is 5 per cent per annum, to be paid monthly.
Flaherty & Crumrine Incorporated (Flaherty & Crumrine) will act as the sub-advisor to BPRF. Flaherty & Crumrine was established in 1983, and specialises in US-dollar-denominated preferred securities and corporate debt instruments. The firm uses 30 years of proprietary data on over 1500 preferred securities to carry out intensive credit analysis, thorough vetting of securities’ terms and structures, and active portfolio management, with the goal of exploiting pricing inefficiencies in the preferred securities market to provide attractive rates of return on its funds. As of 30 September, 2018, Flaherty & Crumrine’s AUM was approximately USD4.2 billion, primarily in preferred securities.
Brompton Global Dividend Growth ETF (BDIV) invests in an actively-managed portfolio consisting of securities of at least 20 global dividend growth companies with a market capitalisation of at least USD10 billion, that have a history (or in the Manager’s view a future likelihood) of dividend growth. BDIV’s portfolio will be selected by the Manager with consideration given to applicable factors including, but not limited to, dividend growth potential, valuation, profitability, current dividend yield, balance sheet strength, and/or trading liquidity of the equity securities and options. The Manager will consider such factors as macroeconomic conditions, political conditions and sector fundamentals when determining the geographic and sector allocation of BDIV’s portfolio, in addition to consideration of diversification across regions, countries, sectors and industries. In order to increase distributable cash and to reduce portfolio volatility, the Manager may write covered calls on up to 33 per cent of BDIV’s portfolio. BDIV’s targeted distribution rate is 6 per cent per annum, to be paid monthly.
Brompton North American Financials Dividend ETF (BFIN) invests in an actively- managed portfolio consisting of securities of at least 15 North American financial services companies with a market capitalisation of at least USD5 billion. BFIN’s portfolio will be selected by the Manager with consideration given to applicable factors including but not limited to dividend growth potential, valuation, profitability, current dividend yield, balance sheet strength, and/or trading liquidity of the equity securities and options. The Manager will consider various factors, including but not limited to, macroeconomic conditions, political conditions, the regulatory environment and sector fundamentals when determining the geographic and sector allocation of BFIN’s portfolio.
The Manager will allocate to sub-sectors and geographies based on the Manager’s view of the relative attractiveness of the investment opportunities available therein. Up to 20 per cent of BFIN’s portfolio may be invested in other financial services companies, or in financial services-related companies, or in global financial services companies. BFIN’s targeted distribution rate is 5 per cent per annum, to be paid monthly.
