1 ETFINSIGHT YOUR SOURCE FOR THE LATEST ETF NEWS & INSIGHTS Exchange Traded Forum 2014 (October 6): Industry Update Oct 6, 2014
ETFinsight Ongoing updates, Weekly recaps, Monthly Perspectives, Model Portfolios, ETF screener, webinars 2
ETFinsight Industry Update 3
ETFinsight Industry Update Backdrop: Continued Geopolitical Risk/Uncertainty (Russia-Ukraine/Israel- Gaza/Syria/HongKong) Risk associated with a) Diverging interest rates policies (FED vs ECB, vs BoJ); b) Too little too late to pre-empt deflation from taking hold in Europe Long climb up the proverbial Wall of Worries Risky perception that There Is No Alternative As good as it gets? Profitability at all-times high, bolstered by low interest rates, share buybacks, and productivity gains Volatility Very subdued from a longer term perspective Despite literally all the money printing in the World, not much in the way of inflation signs? Or are there? 4
ETFinsight ETFs Growth in new Millenium 5
ETFinsight Aggregate Allocation 6
ETFinsight Aggregate Allocation 7
ETFinsight ETFs AUM: Still heavily concentrated at the top But ishares ishares (former Claymore) BMO ETFs Vanguard ETFs Horizons ETFs PowerShares ETFs First Asset ETFs 8
ETFinsight With a couple of layers of meaningful choices ishares ishares (former Claymore) BMO ETFs Vanguard ETFs Horizons ETFs PowerShares ETFs First Asset ETFs 9
ETFinsight With a couple of layers of meaningful choices ishares ishares (former Claymore) BMO ETFs Vanguard ETFs Horizons ETFs PowerShares ETFs First Asset ETFs 10
ETFinsight ETFs lots of choices! Fixed Income including Preferred Shares ETFs: Broad / Government / Corps incl. HY Ladders (incl. Strip ladders) Government/Provincials/Corps by duration buckets (incl. Floaters/Loans) Strategies: Barbell; Discount Bonds; Equity ETFs: Traditional Market Cap Fundamental / Factors EW Sectors / Regions Alternative ETFs Covered Calls Commodities Hedge Funds Fundamental with Risk mitigation overlay Seasonal Rotation 11
ETFinsight AUM evolution by Asset Class AUM Growth rates by Asset category cash Bonds + Prefs canadian equities us equities international emerging commodities portfolios aggregate Sep-09 99,434,804 5,345,147,272 16,484,206,848 1,374,819,547 2,989,666,788 351,337,381 1,932,222,569 304,634,975 $28,881,470,184 Sep-10 68,359,325 8,543,379,583 19,309,264,566 1,895,630,742 3,261,638,431 690,926,384 2,129,700,840 390,086,902 $36,288,986,774 Sep-11 77,419,418 11,336,691,151 19,889,998,560 2,094,438,009 3,219,340,204 651,272,433 1,850,960,469 522,163,077 $39,642,283,320 Sep-12 76,150,879 18,780,888,726 24,770,264,580 3,160,199,976 3,596,457,630 759,705,844 1,644,622,352 899,076,591 $53,687,366,579 Sep-13 125,664,661 21,653,850,511 25,288,850,449 5,821,583,214 3,708,211,824 876,835,587 1,387,362,026 1,137,036,888 $59,999,395,160 Sep-14 209,305,228 25,420,722,167 29,432,327,153 9,621,154,546 5,266,362,806 1,082,402,076 1,082,281,256 1,184,903,841 $73,299,459,073 X fold incr: 2.10 4.76 1.79 7.00 1.76 3.08 0.56 3.89 2.54 growth rate: 16.1% 36.6% 12.3% 47.6% 12.0% 25.2% -10.9% 31.2% 20.5% compounded compounded compounded compounded compounded compounded compounded compounded compounded growth rate growth rate growth rate growth rate growth rate growth rate growth rate growth rate growth rate last 5 years last 5 years last 5 years last 5 years last 5 years last 5 years last 5 years last 5 years last 5 years Sept 14 / Sept 09 $109,870,424 $20,075,574,895 $12,948,120,305 $8,246,334,999 $2,276,696,018 $731,064,695 -$849,941,313 $880,268,867 $44,417,988,890 AUM Growth in % 0.2% 45.2% 29.2% 18.6% 5.1% 1.6% -1.9% 2.0% 100.0% Last 2 years Last 2 years Last 2 years Last 2 years Last 2 years Last 2 years Last 2 years Last 2 years Last 2 years Sept 14 Sept 12 $133,154,349 $6,639,833,441 $4,662,062,574 $6,460,954,570 $1,669,905,176 $322,696,231 -$562,341,097 $285,827,250 $19,612,092,494 AUM Growth in % 0.68% 33.9% 23.8% 32.9% 8.5% 1.6% -2.9% 1.5% 100.0% Last year Last year Last year Last year Last year Last year Last year Last year Last year Sept 14 Sept 13 $83,640,567 $3,766,871,656 $4,143,476,704 $3,799,571,332 $1,558,150,982 $205,566,489 -$305,080,770 $47,866,953 $13,300,063,914 AUM Growth in % 0.63% 28.32% 31.15% 28.57% 11.72% 1.55% -2.29% 0.36% 100.00% 12
ETFinsight Factor-based ETFs 13
ETFinsight Factor-based ETFs breakdown VALUE MOMENTUM + GROWTH RAFI / Quality SMALL CAP/EW VOL "DRIVEN" YIELD 30-Sep-08 $ 25,660,603 $ 39,068,046 $ 122,261,561 $ 89,831,605 $ - $ 298,778,838 VALUE MOMENTUM + GROWTH RAFI / Quality SMALL CAP/EW VOL "DRIVEN" YIELD 30-Sep-10 $ 58,654,050 $ 42,885,016 $ 507,885,279 $ 496,442,740 $ - $ 1,303,737,799 VALUE MOMENTUM + GROWTH RAFI / Quality SMALL CAP/EW VOL "DRIVEN" YIELD 30-Sep-12 $ 67,057,899 $ 57,059,133 $ 818,049,873 $ 1,635,378,244 $ 66,144,167 $ 2,421,875,045 VALUE MOMENTUM + GROWTH RAFI / Quality SMALL CAP/EW VOL "DRIVEN" YIELD 30-Sep-14 $ 404,812,496 $ 236,134,641 $ 1,433,105,554 $ 2,221,147,176 $ 659,572,425 $ 5,422,376,889 VALUE MOMENTUM + GROWTH RAFI / Quality SMALL CAP/EW VOL "DRIVEN" YIELD $15.78 $6.04 $11.72 $24.73 infinity $18.15 14
ETFinsight Relative Growth trajectory 15
ETFinsight Key Discussion points Beta exposure increasingly accessible at ultra competitive pricing Smart Beta / Factor-Based Indexing Real World performance; Variety of approaches/factors; Increasing penetration Resulting Risk-Adjusted Profiles differentiated from Traditional Market Cap Indexing Access to Alternative Investments via ETFs Actively Managed / Leveraged in context of Bull Market 16
ETFinsight Evaluation criteria Underpinnings of the methodology Relevance of the methodology to access being provided Implementation capacity of the methodology Additional Costs attendant to the methodology Applicability of the exposure for portfolio implementation Degree of exposure warranted given methodology trade-offs/clients profiles and objectives Liquidity and costs 17
ETFINSIGHT YOUR SOURCE FOR THE LATEST ETF NEWS & INSIGHTS 18