By Nita Balani
TORONTO: The 2013 ETF conference held in Toronto recently had just about everything – premium quality content, top-of-the-line speakers and professionals from the field who really were experienced and knowledgeable. If you are new to this territory, ETF stand for exchange-traded funds and all ETFs trade on the stock market just like stocks.
The presentations at the fourth edition of the ETF conference were extremely relevant to our times and brought sound advice to the current economic environment of impending rising interest rates and poor performing funds.
ETF workshops and panels were expertly moderated by Pat Bolland (Veritas Communications), Amelia Nedovich (TSX) and Kevin Prins and Daniel Stanley (BMO). Exhibitors and other participants included the best of the best – Vanguard, Horizon ETFs, PowerShares Canada, ETFGI, KPMG, ETFInsight PUR Investing.
The focus this year was on innovative strategies and creative ETF products to help investors build better fixed income portfolios with greater returns, minimum risks, and lower fees. The discussions centered on the Fixed Income space and how it has attracted new investors as bulk of new assets under management in the ETF world are concentrated in the fixed income space despite a low interest rate environment.
Interesting topics such as how ETFs are changing the market, regulatory changes, key issues that financial advisors are facing, counterparty risks, trading strategies, and specific ETF products and how they are constructed to meet specific objectives efficiently with better tax benefits and lower costs were well presented by the speakers.
The finer points and technical terms and techniques such as “laddered ETFs” and “barbell bond” strategies were explained carefully and their practical use demonstrated through specific ETFs by Rohit Mehta and David Barber of First Asset.
Nicolas Normandeau, VP and Portfolio Manager Fixed Income Fiera Capital, discussed “ETF strategies for Rising Interest Rates”.
The economy has had a long run of extremely low interest rates which may be soon coming to an end and planners and advisors should be ready to weave new ideas to increase returns on investors’ capital in the form of short duration ETFs and Preferred Share ETFs.
The Canadian ETF market has burgeoned into a mind-boggling figure of $59.5 billion in 2013 a huge leap from $36 billion in Jan 2011. But still in comparison to the US it is a small figure. The current assets under management for ETF markets in USA, is estimated to be $1.3 trillion in 2013 which constitutes 70% of the global ETF market. (The Indian ETF market size is estimated to be $325 million).
Jeffrey Shaul, President and CEO of Robson Capital Management, spoke about how “the revolution in the making” in this fixed income space continues to grow and how ETFs have become highly evolved strategies and are becoming increasingly actively managed.
He expressed his view of how the “floodgates of investment would open” once the US regulatory hurdle of daily portfolio disclosure is overcome.
In Canada, he explained, this is not the case as the issue is more of a practical one as the markets for passively managed ETFs are saturated and there is a greater need for transparency and intraday liquidity for actively managed ETFs.
The Royal Canadian Mint (RCM) brought a little bit of sheen and gleam into the conference by having an interactive discussion on Exchange Traded Receipts issued for direct ownership of Canadian Gold and Silver Reserves.
Steve Higgins, ETF Compliance and Investor Relations, RCM, demystified the concept of buying into “physical gold and silver” as he explained the unique structure of Exchange Traded Receipts issued by the Royal Canadian Mint and how they differ from any other bullion ETF products in the marketplace today in their structure and features.
The most memorable quotes were delivered by the distinguished Benjamin Tal, Deputy Chief Economist for CIBC World Markets, as he gave interesting, hard hitting and yet humorous insight into the 2013-2014 global economic world. Benjamin Tal spoke about China’s less than phenomenal growth, its move toward becoming increasingly a consumer intensive market not a commodity intensive one in the next decade which would impact North America severely.
Speaking about the Eurozone crisis, Tal said the status was “it is complicated” and with several humorous quotes taken from recent global media drove home the point that we did not really know what exactly was going on. “we know that Spain is not Greece” and “Italy is not Spain” and “Portugal is not Greece” “Greece is not Ireland” and “Spain is not Cyprus” So what exactly was going on in the Eurozone remains shrouded in mystery and experts can examine the indicators and establish their diverse viewpoints.
When asked about why everyone was attracted so much to gold and buying gold, he said “Gold is the comfort food.” When times are bad, everyone buys into it for protection just like you go to your comfort food.
But he felt that all that glitters is not really gold, and politely asked for more time to discuss global concerns and issues at home amid resounding applause from the audience.
In the current economic environment, every financial planner or advisor must stay in touch with the fast changing investment products in the marketplace in order to offer the best to his/her clientele.
For more information on upcoming events check their website www.radiusfinancialeducation.com