CI Global Asset Management (“CI GAM”) has announced that it has received a receipt for the final prospectus of CI Global Minimum Downside Volatility Index ETF and CI US Minimum Downside Volatility Index ETF.
CI GAM expects the new ETFs to begin trading on the Toronto Stock Exchange (“TSX”) on or after January 24, 2023, subject to TSX approval. The tickers for CI Global Minimum Downside Volatility Index ETF will be CGDV (Hedged Common Units) and CGDV.B (Unhedged Common Units), and the tickers for CI U.S. Minimum Downside Volatility Index ETF will be CUDV (Hedged Common Units) and CUDV.B (Unhedged Common Units).
“At a time of heightened market volatility, these ETFs will provide a well-designed defensive component to investors’ portfolios,” says Roy Ratnavel, Executive Vice-President and Head of Distribution for CI GAM. “Unlike many other low-volatility funds, these mandates focus on managing downside volatility, with the goal of minimising negative returns while still benefiting from rising share prices.”
The ETFs are designed to replicate the performance of Solactive indexes that track the performance of portfolios of companies that exhibit lower downside volatility than the broader developed equity markets. The portfolios are constructed to avoid excessive sector concentration and turnover, the firm says. CI Global Minimum Downside Volatility Index ETF will represent a portfolio of global companies and CI U.S. Minimum Downside Volatility Index ETF will represent a portfolio of US companies.
CGDV will seek to replicate the performance of the Solactive DM Minimum Downside Volatility Hedged to CAD Index NTR, which is hedged to the Canadian dollar, while CGDV.B will seek to replicate the performance of the Solactive DM Minimum Downside Volatility CAD Index NTR, which is unhedged.
CUDV will seek to replicate the performance of the Solactive US Minimum Downside Volatility Hedged to CAD Index NTR, which is hedged to the Canadian dollar, while CUDV.B will seek to replicate the performance of the Solactive US Minimum Downside Volatility CAD Index NTR, which is unhedged.
CI GAM also announced a proposal to merge three existing ETFs – CI MSCI World Low Risk Weighted ETF, CI MSCI International Low Risk Weighted ETF and CI MSCI Europe Low Risk Weighted ETF – into the new CI Global Minimum Downside Volatility Index ETF.
CI GAM believes securityholders will benefit from the mergers given that the continuing ETF is designed to generate lower volatility and better risk-adjusted returns than the terminating ETFs. Additionally, CI Global Minimum Downside Volatility Index ETF has a lower management fee (0.35 per cent) than the terminating ETFs (0.60 per cent). The mergers will be effected on a non-taxable basis.
The mergers require the approval of securityholders of the terminating ETFs. The firm writes that special meetings of securityholders of the terminating ETFs will be held on March 7, 2023 and securityholders will receive meeting materials in February 2023. If approved, the mergers will take place on or after March 31, 2023.
