With the flick of a switch October 30, First Trust Canada introduced 9 U.S. sector funds listed on the TSX. Big deal? Media noise? What’s this really mean for Canadian ETF investors?
On the surface the introduction of nine ETFs by First Trust’s Canadian division doesn’t seem like a big deal. After all, you can already buy them in U.S. dollars on NYSE Arca. And while the symbols are slightly different, the sectors covered are identical.
So, what are we missing?
To answer this question WP went to the source speaking with Karl Cheong, Senior Vice President, ETF Product and Capital Markets and First Trust’s person in charge of the fund rollout.
Cheong provided several compelling reasons why Canadian investors should care about this latest ETF introduction:
1. It’s the first sector suite available in Canada in the ETF space. The nine sector-specific funds provide Canadian investors with choice like they’ve never had before.
2. The management expense ratio for each of the nine funds is 0.70%, identical to the same ETFs offered by First Trust in the U.S. Traditionally, the MERs for clone funds offered by ETF providers in Canada that duplicate existing funs south of the border, are typically higher. Investors are getting a level playing field, something you don’t see too often.
3. Initially available hedged to the Canadian dollar, First Trust is rolling out an unhedged version in the near future. More importantly, this offering potentially eliminates the need for an investor to file form T1135 with the Canada Revenue Agency, which requires that all taxpayers do so who have foreign property costing more than $100,000 Canadian. Denominated in Canadian currency, these funds aren’t considered foreign.
First Trust is bringing to market a unique product in Canada. Karl Cheong projects the sector suite will generate $200 million in total net assets within the first 12 months of their availability. It’s no wonder he’s so enthusiastic. Time will tell if Canadians feel the same.
So, what are we missing?
To answer this question WP went to the source speaking with Karl Cheong, Senior Vice President, ETF Product and Capital Markets and First Trust’s person in charge of the fund rollout.
Cheong provided several compelling reasons why Canadian investors should care about this latest ETF introduction:
1. It’s the first sector suite available in Canada in the ETF space. The nine sector-specific funds provide Canadian investors with choice like they’ve never had before.
2. The management expense ratio for each of the nine funds is 0.70%, identical to the same ETFs offered by First Trust in the U.S. Traditionally, the MERs for clone funds offered by ETF providers in Canada that duplicate existing funs south of the border, are typically higher. Investors are getting a level playing field, something you don’t see too often.
3. Initially available hedged to the Canadian dollar, First Trust is rolling out an unhedged version in the near future. More importantly, this offering potentially eliminates the need for an investor to file form T1135 with the Canada Revenue Agency, which requires that all taxpayers do so who have foreign property costing more than $100,000 Canadian. Denominated in Canadian currency, these funds aren’t considered foreign.
First Trust is bringing to market a unique product in Canada. Karl Cheong projects the sector suite will generate $200 million in total net assets within the first 12 months of their availability. It’s no wonder he’s so enthusiastic. Time will tell if Canadians feel the same.
