Purpose Investments with CAD14 billion in assets, has launched three ETFs on the London Stock Exchange through partnerships with HANetf, bringing medical cannabis, clean energy and enterprise software to the European and UK investor.
Greg Taylor, Chief Investment Officer and Nicolas Mersch, portfolio manager from Purpose Investments, explain that the firm is an active multi asset investment manager, offering investment across 60 different strategies.
Taylor says: “All our strategies are active across all active classes.”
Cannabis in all its forms has been in their portfolios since 2018 when they launched the first actively managed cannabis ETF. The product was so popularly received that they decided to try other markets and launched a medical cannabis ETF with HANetf in 2020. “Interesting timing of course,” Taylor says. “It was just before the world changed and interesting for us to bring our funds and our expertise to Europe because of the nuances of investing compared with Canada and the US.”
Taylor explains that they had to adapt to UK regulation to list a cannabis ETF on the LSE, leaving out recreational exposure to the drug and focusing on medical and CBD higher quality product, which had lower volatility than some of the recreational companies in which the Canadian ETF invested.
Cannabis was completely legalised in Canada in 2018. “It hasn’t worked out that well as the government has done an awful job of managing it. They have proven to be the worst drug dealers in history,” he says.
Things are improving, he believes, predicting a third wave of recovery for the sector, as the Democrats in the US start to fast track a bill to legalise cannabis and more importantly allow banking and listing on exchange of cannabis companies which would allow investment firms to invest in the sector.
2021 has seen the firm launch products based on software and clean energy and a crypto ETF – the world’s first physically backed bitcoin fund – that has over CAD2 billion in assets.
“This has gained lots of attentions globally and is a good fund for us,” Taylor says. The firm has a fund based on bitcoin and another on Ethereum, trading on the spot price. “We got a lot of international attention,” he says, commenting that investors in the fund split half and half between institutional and retail, roughly, although Ethereum is a little more skewed towards institutional and bitcoin towards retail.
The firm also has a fund of structured notes with CAD1.5 billion under management which has 250 underlying notes in it and pays a monthly distribution of 6 per cent, which he says: “Answers the search for yield”.
He comments that Canada was one of the first markets to launch ETFs and they are carrying that torch. “We like to think we are innovators in the ETF market,” he says. “We are more active than passive and we don’t do any passive ETFs at all.”
Taylor’s colleague, Mersch is portfolio manager for the two new HANetf products in Europe, Purpose Enterprise Software ESG-S UCITS ETF and the HANetf S&P Global Clean Energy Select HANzero UCITS ETF. “If you think historically in terms of power generation what we found is that the levelised cost of energy for solar is now one of the cheapest sources of energy even including fossil fuels, but the big problem with renewables was intermittency because the sun doesn’t always shine and the wind doesn’t always blow.”
Advances in battery technology means that storing clean energy is much cheaper. The Purpose product is based on a version of the S&P Clean Energy Index and has the HANetf carbon offset filter, HANzero, on top.