Al­lianz steps into Cana­dian fixed-in­come ETF mar­ket

The Globe and Mail Metro (Ontario Edition) - - BIRTH AND DEATH NOTICES - CLARE O’HARA

Global in­vest­ment gi­ant Al­lianz is step­ping into the Cana­dian fixed-in­come ETF mar­ket.

With US$612-bil­lion in as­sets, Al­lianz Global In­vestors US LLC will be sub­ad­vis­ing the Evolve Ac­tive Global Fixed In­come ETF. Evolve Funds Group Inc. filed a pre­lim­i­nary prospec­tus for the fund on Fri­day. Un­der the ticker EARN, and with a man­age­ment fee of 0.65 per cent, the fund will in­vest pri­mar­ily in global bonds of cor­po­rate is­suers.

Al­lianz Global In­vestors is a sub­sidiary of Al­lianz SE, a Mu­nich-based is­suer who man­ages ap­prox­i­mately US$2.2-tril­lion in as­sets. It is also the par­ent firm of Pa­cific In­vest­ment Man­age­ment Co. LLC (Pimco) and Op­pen­heimer Cap­i­tal LLC.

“The op­por­tu­nity to ex­pand our pres­ence in the Cana­dian mar­ket through this part­ner­ship with Evolve ETFs feels bothw ell-timed andw ell­matched ,” David New­man, head of global high yield at Al­lianz Global In­vestors said in a state­ment. “While Evolve has deep knowl­edge of the Cana­dian ETF mar­ket that we have been look­ing to break into, All ianzGIb rings decades of ex­pe­ri­ence across credit mar­kets, an date am that has been a pioneer of global fixed in­come.”

Last year, 40 per cent of all Cana­dian fixed in­come ETF in­flows were into ac­tive ETFs as fixed in­come se­cu­ri­ties con­tinue to be a core com­po­nent of in­vestor port­fo­lios. Last month, the Cana­dian ETF mar­ket hit $163- bil­lion in as­sets un­der man­age­ment with net in flows of $716- mil­lion–of which $652- mil­lion went di­rectly into fixed in­come funds.

Al­lianz Global In­vestors US LLC man­ages US$36-bil­lion in global fixed in­come (as of June 30).

EARN will be the first Cana­dian prod­uct the as­set man­ager has cho­sen to sub ad­vise, and will aim to gen­er­ate pos­i­tive re­turns through­out in­ter­est rate and eco­nomic cy­cles by al­lo­cat­ing to dif­fer­ent credit as­set classes and also through bot­tom-up in­di­vid­ual se­cu­rity se­lec­tion.

Ri­val as­set man­ager Pimco Canada Corp. en­tered the ETF mar­ket last month, launch­ing two ac­tively man­aged bond ex­change-traded fund se­ries. It is al­ready the 10 th largest Cana­dian ET F provider with $761-mil­lion in as­sets.

De­spite Pimco and Al­lianz Global In­vestors both be­ing owned by Al­lianz SE, the two sis­ter com­pa­nies op­er­ate as di­rect com­peti­tors in the fixed in­come space, steer­ing Al­lianz to set up a part­ner­ship with a Cana­dian com­peti­tor.

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