Excel Funds Management Inc., a Mississauga, Ont. mutual fund provider specializing in emerging markets, has decided to join the growing list of money managers offering their specialized expertise through ETFs.
Excel has filed a preliminary prospectus for two ETFs: Excel Global Balanced Asset Allocation ETF and Excel Global Growth Allocation ETF. The ETFs will employ a risk-budgeting, quantitative investment strategy with global diversification, executed by subadvisor Alken Asset Management Ltd. of England.
The prospectus states that Excel Global Balanced Asset Allocation ETF’s investment objective is to seek a targeted annul return of 2.5 percentage points over the Bank of Canada’s overnight lending rate during a two- to three-year period, before fees. The ETF targets volatility of approximately the long-term volatility of the Bloomberg Barclays Global Aggregate CAD Float Adjusted Total Return Index Value (Unhedged) over the same rolling period, estimated to be in a range of 4% to 6%.
The Excel Global Growth Asset Allocation ETF has a targeted return in excess of five percentage points over the Bank of Canada overnight lending rate for a rolling three- to five-year period before fees, while targeting volatility equal to half the long-term historical volatility of MSCI all country world index, estimated to be in a range of 8% to 9%.
It’s anticipated that the Excel ETFs will make distributions to unitholders on annual basis, although distributions are not guaranteed.
The ETFs may invest up to 25% of assets in other mutual funds, including those managed by Excel. They may also invest in other global securities domiciled in Canada, the U.S. or other developed markets, including up to 100% their assets in other ETFs.
The new Excel ETFs may also hold government-issued fixed-income securities of foreign issuers and may invest in derivatives such as options, futures and forward contracts.
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