After three months of market turmoil, the Wall Street adage of “Sell in May and go away” was defied by possibly the best monthly performance for the S&P 500 index with a 6-per-cent return.
The Federal Reserve unanimously chose to keep the benchmark rate unchanged, but warned of risk to higher inflation and higher unemployment as it continues to navigate the tariff shock.
Bitcoin appears to be following gold as an asset that is part speculative and part store of value. The token reached new heights with prices climbing as high as US$112,000.
According to Morningstar’s Best-Performing ETFs report, BMO Equal Weight Global Base Metals Hedged to CAD Index ETF (ZMT-T) was the best performing Canadian ETF with a price appreciation of 13.2 per cent. The Franklin Innovation Fund (FINO-T) took the second spot with a 1-month price delta of 11.6 per cent. This Fund invests primarily in companies with sustainable innovation-driven growth prospects. Rounding out in third position is Harvest Travel & LeisureIndex ETF (TRVL-T), which etched out a price appreciation of 10.9 per cent for the month. This ETF focuses on growth trends in the travel industry.
Additions
The month of May was host to thirty-three new ETF issues into the Canadian marketplace.
CIBC ETFs
CIBC Asset Management launched three fixed income ETFs. The Cash Management ETFs, namely CIBC Premium Cash Management ETF (CCAD-T) and CIBC USD Premium Cash Management ETF (CUSD-U-T), are low-risk options for investors seeking to preserve capital and maintain liquidity while receiving a compelling yield.
The CIBC Canadian Government Long-Term Bond ETF (CALB-T) offers a higher level of income by investing primarily in longer-dated fixed income securities of Canadian government issuers.
Manulife ETFs
Manulife Investment Management added four new ETFs series. Manulife Canadian Equity Class (MCAN-T) focuses on high quality Canadian companies exhibiting sustainable business models, predictable cash flows and growing dividends.
Manulife Dividend Income Fund (MDIF-T) invests primarily in dividend-paying companies and is ideal for investors seeking monthly income and growth potential for their portfolio.
Manulife Fundamental Equity Fund (MFUN-T) invests mainly in Canadian, U.S., and global equities with the objective of long-term capital growth while providing steady income from dividends.
Lastly, Manulife Core Plus Bond Fund (MCOR-T) seeks income generation with an emphasis on capital preservation by investing primarily in Canadian fixed income securities. This low-risk option provides investors with exposure to a mix of government and high yield corporate bond holdings
BMO ETFs
BMO Asset Management launched eight new BMO ETFs in May.
BMO US Equity Focused ETF (ZBEU-NE, ZBEU-F-NE) seeks to provide long term capital appreciation through investing in large-cap U.S. equities using a fundamental process.
BMO US Dividend Growth ETF (ZBDU-NE, ZBDU-F-NE) invests in dividend-paying equity securities in the U.S. with a focus on consistent dividends, yield and growth.
BMO Canadian Core Plus US Balanced ETF (ZBCB-NE) is constructed to provides a balance of income and long-term capital appreciation by investing in Canadian and U.S. equity securities and debt instruments.
BMO Canadian Equity Plus ETF (ZBEC-NE) is an actively managed, diversified portfolio of Canadian and, to a lesser extent, U.S. equities designed to provide long-term growth.
BMO Large Cap Disciplines Value ETF (ZBVU-NE) focuses on finding attractive value in U.S. large-cap companies while employing an investing style developed on fundamental themes and sector recommendations.
BMO Covered Call Spread Gold Bullion ETF (ZWGD-T) provides exposure to the price of gold bullion through long-term holdings of unencumbered gold bullion, while mitigating some downside risk using a covered call spread strategy. The ETF aims to provide long-term capital appreciation to investors.
BlackRock ETFs
BlackRock and Royal Bank of Canada have added to its Core ETF lineup in Canada. The iShares Core S&P Total U.S. Stock Market Index ETF (XTOT-T, XTOT-U-T) is designed to provide investors with affordable options to access the total U.S. equity market.
Additionally, the iShares Core Canadian Short-Mid Term Universe Bond Index ETF (XSMB-T) aims to replicate the performance of the FTSE Canada Short-Mid Universe Bond Index, which is broadly representative of Canada bonds with maturities between 1 and 10 years.
Purpose ETFs
Purpose Investments adds to its cost-efficient bitcoin offering with Purpose Core Bitcoin ETF (BTCO-B-T, BTCO-U-T) for investors to gain bitcoin exposure for their portfolio.
Other launches
Mackenzie also added the Mackenzie AAA CLO ETF (MAAA-T) to the market. The fund invests in AAA tranches with yield higher than corporate investment grade debt.
Accelerate Financial Technologies launched the CAD-hedged version of the Accelerate Diversified Credit Income Fund (ICM-B-T), an ETF designed to generate an attractive income stream through exposure to a diversified portfolio of primarily secured, floating-rate loans.
Inverse and inverse-leveraged ETFs
The objective of inverse / inverse-leveraged ETFs is to fetch outsized returns on quick market turns in a short span. The strategy begins by creating an inverse of a leveraged inversed position in the underlying asset or index through the use of swaps, options, futures contracts and other financial instruments. Due to their compounding effect, investors can enjoy higher returns in a very short period of time, provided the trend prevails.
LongPoint Asset Management Inc. launched triple-leveraged index ETFs with its Mega ETF series.
The following ETFs have a high risk rating, each with a management fee of 1.55 per cent:
- MegaShort (-3x) NASDAQ-100® Daily Leveraged Alternative ETF (QQQD-T)
- MegaLong (3x) NASDAQ-100® Daily Leveraged Alternative ETF (QQQU-T)
- MegaShort (-3x) US Semiconductors Daily Leveraged Alternative ETF (SOXD-T)
- MegaLong (3x) US Semiconductors Daily Leveraged Alternative ETF (SOXU-T)
- MegaShort (-3X) S&P 500® Daily Leveraged Alternative ETF (SPYD-T)
- MegaLong (3X) S&P 500® Daily Leveraged Alternative ETF (SPYU-T)
- MegaLong (3X) Canadian Banks Daily Leveraged Alternative ETF (BNKU-T)
- MegaShort (-3X) 20+ Year US Treasury Daily Leveraged Alternative ETF (TLTD-T)
- MegaLong (3X) 20+ Year US Treasury Daily Leveraged Alternative ETF (TLTU-T)
- MegaShort (-3X) Canadian Gold Miners Daily Leveraged Alternative ETF (CGMD-T)
- MegaLong (3X) Canadian Gold Miners Daily Leveraged Alternative ETF (CGMU-T)
These ETFs offer innovative strategies that target three times the daily return or inverse return of specific equity indices, rebalanced on a daily basis.
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Amy Mak is ETF Specialist at Inovestor.
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