i-invest
The Smart Choice We spoke to Arnaud Llinas, Head of ETFs and Indexing at Lyxor Asset Management to gain an insight into the services the firm provides in this area. /12
i-invest 2016 ETF Awards
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Welcome to the 2016 i-invest ETF Awards The exchange-traded fund market has been growing rapidly in recent years, despite a number of global financial struggles and the relatively late introduction of ETFs into the financial market. Despite these challenges many investment firms have successfully used these unique products to provide their clients with strong, risk averse returns, as well as the tax efficiency and lower transaction costs which are a favourable feature of ETFs. The 2016 ETF Awards have been created to celebrate and reward the hard work put in by everyone working within this dynamic and growing sector: from the funds themselves to the managers, investors and support service providers that make these funds the success they are.
Contents Capital Wealth Planning, LLC Best Proprietary ETF Income Portfolio (3 Years): CWP Hedged ETF Covered Call Portfolio & Award for Innovation in Tactical Covered Call Overlay Page 4. Deka Investment GmbH Best UCITS ETF Manager - Germany & Best Corporate Diversified ETF (Since Inception) & Award for Innovation in High Dividend ETFs Page 6. Euronext Best European ETF Exchange Page 8. China Asset Management (Hong Kong) Limited Best Performing Large ETF: ChinaAMC CSI 300 & Best China ETF Manager 2016 Page 10. Lyxor Asset Management Best Smart Beta ETF Provider & Best New ETF: Lyxor Smart Cash UCITS ETF Page 12. Optiver Best European Equity ETFs Market Maker Page 14. Pacer ETF Distributors Best New ETF Issuer 2016 & Most Innovative Large Cap ETF: PTLC, Best Eurozone ETF (Since Inception): PAEU & Best New Strategy Driven ETF: PGHD Page 16.
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4 i-invest ETF Awards 2016
Best Proprietary ETF Income Portfolio (3 Years): CWP Hedged ETF Covered Call Portfolio & Award for Innovation in Tactical Covered Call Overlay
Capital Wealth Planning (CWP) is an independent, fee-only Investment Advisory firm registered with the Securities and Exchange Commission. Kevin Simpson talks us through the company and its service offering.
Capital Wealth Planning specializes in providing sub-advisory investment services to financial advisors who service high net worth individuals, pensions, profit sharing plans, trusts, estates, charitable organizations, and corporations. The firm’s strategic focus is concentrated on providing proprietary managed account investment products and services for institutional and regional broker/dealer managed account platforms. Kevin outlines the firm’s investment approach and how this helps the firm to secure good returns for its clients. “Capital Wealth Planning is a relatively conservative firm that focuses on moderate growth, low volatility and income generation. We have two strategies, a managed portfolio of ETFs and a managed portfolio of U.S. blue chip dividend paying stocks, each of which employ a conservative covered call overlay. For our ETF portfolio, we invest in low cost, liquid ETFs, which have suitable option chains that can accommodate the volume of shares that we hold for our clients.” “What sets us apart from our competitors is that we write covered calls tactically rather than systematically. When managers write calls systematically and cover 100% of the portfolio, in effect, they are limiting the potential upside if the market were to move higher. Our managers like to sell into strength and identify opportunities that do not limit potential upside, but allow us to participate in sharp moves higher.” Capital Wealth Planning has increased its AUM from 300 million starting January 1st 2016 to 500 million ending June 30th 2016. The 66% increase in assets is due mostly to
the firm’s new distribution channels that have opened up on institutional managed account platforms. Kevin outlines the strategies that one of its most successful funds, the award winning ETF Hedged Covered Call Portfolio, employs to ensure the firm’s continued financial success. “Our ETF Hedged Covered Call Portfolio is designed as a risk management strategy, which means, as the market moves appreciably higher, the resulting risk-reward from market exposure declines as the relationship is inversely correlated. Risk management is one of the most underutilized techniques on the street, as it is unfashionable or not attractive to not be ‘all-in’ the market as it makes new high after new high. To combat this, CWP has built-in a mechanism to reduce risk profile as the market consistently reaches higher levels. CWP’s process of achieving this objective is multi-fold; CWP can either sell or reduce existing positions, buy a non-correlated asset (i.e. bonds), or an inversely correlated asset (i.e. short position on a large index, S&P 500).” “Our ETF strategy was most recently ranked number six in Morningstar’s top ten managed ETF portfolios based on five year returns and selected risk statistics in their ETF Managed Portfolio Landscape Report for the first quarter 2016.” Overall the future looks bright for Capital Wealth Planning, as Kevin highlights the firm’s plans to adjust its strategies to adapt to industry trends. “Our strategies were derived from financial advisors and their clients demands. In an environment where interest rates have been head-
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ing lower for the past several years, investors were starting to look to low cost ETFs and dividend paying stocks for yield. We thought, why don’t we concentrate on constructing a portfolio of 6-11 ETFs and 18-22 stocks and write covered calls against the underlying securities to enhance the yield, selling the calls in a tactical manner, rather than blanket covering the entire portfolio.” “This approach, so far, has had continued success and allowed us to grow our firm at a sustainable rate with solid, sticky assets.” “Currently we are noticing that increasing numbers of advisors are using managed account vehicles for their clients instead of mutual funds and other types of open-ended funds. Managed account portfolios are starting to become more mainstream because of their, transparency, liquidity, low fees, and ability to write options against the underlying ETFs and stocks. “Therefore, moving forward we are very excited about our future in the managed account space. We will continue to move our investment strategies into more single contract distribution channels that are offered on institutional managed account platforms. We will also be launching our own Covered Call ETF with Amplify ETFs. We hope for this to IPO in late fall 2016.”
Company: Capital Wealth Planning, LLC Name: Kevin Simpson Email: KSimpson@CapitalWealthPlanning.com Web: www.CapitalWealthPlanning.com Address: 1016 Collier Center Way Suite 101 Naples, FL 34110 Telephone: 239-593-2100
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6 i-invest ETF Awards 2016
Best UCITS ETF Manager - Germany & Best Corporate Diversified ETF (Since Inception) & Award for Innovation in High Dividend ETFs
DekaBank manages in excess of EUR220bn. on behalf of both private and institutional investors, with the total AuM in the 43 Deka Exchange Traded Funds currently standing at an impressive EUR7.2bn. We invited Nigel Longley, Director ETF Marketing and Product Services to tell us more about the firm and its ETF offering. Deka are a German capital management company developing solutions at the request of our clients and stakeholders. This covers development of the new product pipeline as well as detailed fund reporting and client service. ETFs from the Deka Group were originally issued by ETFlab Investment GmbH, which was founded in 2008 as a 100% subsidiary of DekaBank. In July 2013 ETFlab was merged into the parent company and the fund names were changed to “Deka ETFs”. This new brand is dedicated to providing “ETFs Made in Germany”- ETFs exclusively domiciled in Germany. The company was created in order to provide solutions to the needs of professional investors. The flagship ETFs issued by Deka Investment are Deka DAX® UCITS ETF (ISIN DE000ETFL011): - one of the three largest and most liquid DAX ETFs - with an AuM of over EUR1.6bn and Deka EURO STOXX 50® UCITS ETF (ISIN DE000ETFL029) with over EUR1bn in assets.
The S Finanzgruppe is one of the largest financial groupings in the world. The core of the group is formed by the German Sparkassen (Savings Banks) which are owned by German local authorities. Deka is 100% owned by these savings banks and unlike any other ETF issuers in Europe is a public institution as opposed to a stock-market listed entity. All Deka ETFs are domiciled in Germany and possess German (DE) ISINs. The German regulatory body BaFIN has the reputation of being a very investor protective regime inasmuch as fund issuers are put under a microscope to protect investors’ interests. Additionally, for Germany-domiciled investors investing in Germany-domiciled ETFs makes tax reporting very simple and can have advantages over investing in foreign-domiciled ETFs. Another of our key advantages is our hotline and Email-support for investors, where they are in direct contact with one of our very own dedicated members of the ETF-team. As such investors can directly discuss any questions with one of our experts; making the process very efficient for them.
A fast-growing ETF in these times of low bond interest payments has been the Deka DAXplus® Maximum Dividend UCITS ETF (ISIN DE000ETFL235), which now has an AuM of EUR340m. The index concept used by this fund has resulted in the past in a significant dividend yield pay out: in 2014 it was 7.47%, in 2015 5.62%. The ETF invests in the 20 highest yielding equities out of the HDAX universe. The criteria are forward looking for dividends being paid during the 6-month periods between May to November and November to May with the index rebalancing twice a year In the current uncertain financial climate investors are keen to minimize unnecessary risk. One of the differentiating factors of Deka ETFs is the backing of the S Finanzgruppe.
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In addition, we offer tailor-made customer reports. With the increasing regulatory requirements, the different investor groups have different needs. We try to fulfil all of them by offering reporting individually tailored to their needs. Recently Deka acquired the remainder of S Broker, one of the leading online brokers in Germany. With this move it is now possible for the firm to offer cheap and easy access to a range of Deka ETF savings plans to German clients, which will be one of our focus areas moving forward. Company: Deka Investment GmbH Name: Nigel Longley, Director ETF Marketing and Productservices Email: info.etf@deka.de Web Address: www.deka-etf.de Address: Mainzer Landstrasse 16, 60325 Frankfurt, Germany Telephone: +49 69 7147 2654
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8 i-invest ETF Awards 2016
Best European ETF Exchange
Euronext is the primary exchange in the Euro zone. It is the first to operate across Europe, spanning Belgium, France, the Netherlands, Portugal and the UK. We invited Benjamin Fussien to talk us through the firm and its innovative solution.
Euronext has successfully integrated those five marketplaces to create the first transnational exchange in Europe. ETP Providers can cross-list all their products on the firm’s different venues, providing them with unique exposure. Benjamin talks us through this ground breaking platform as well as exploring a number of the other products the company offers. “Our unique model unites marketplaces and is designed to incorporate the individual strengths and assets of each market. We offer a wide range of products, services and platforms with a strong international presence. “With specific regards to ETFs, we work and partner with a different set of participants, from ETF issuers to market makers and offer an attractive, secure and harmonized trading environment.” Europe is a very strong and efficient marketplace; however, the fragmentation of Europe’s ETF markets continues to present challenges to the industry’s development. This results in small average fund sizes, making efficiencies harder to achieve. It also means that Europe suffers from a comparative lack of liquidity. Operating in such a dynamic and vibrant market Euronext has to work hard to ensure it stays at the very top of its game. The Euronext ETF offering is also truly global, covering more than 500 different indices, and, according to Benjamin, it is this global outlook and collaborative approach which sets the firm apart from its competitors. “Our first priority is to partner with clients. Clients come first whatever happens, whether they are ETF issuers, authorised participants and market makers or all the bank and liquidity providers. We also have a good and constructive relationship with regulators for the five different markets we operate on.
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“With one point of access you can access five different points of access in Europe. It’s very efficient in terms of cost and time saving as we manage everything. We can offer 20 different currencies to ETF issuers and we have a strong statistics team that provides a lot of information to clients. We bring added value to clients with one of the strongest teams in terms of ETFs within the stock exchanges. “We also offer a very smooth listing process with the fastest time to market in terms of listing. ETF issuers can list an ETF with us within five days, with the possibility of cross listing across our five markets.” Looking to the future, Benjamin expressed his optimism, both for the ETF market in general and Euronext. “Moving forward, we have a bright future ahead of us, which we believe is highlighted by our recent results and over-performance compared to our competitors. “Despite this success, we are determined not to rest on our laurels. We are more committed than ever to partner even further with ETF issuers and trading participants, be at the forefront of the industry by bringing more innovation and try to tackle both liquidity and transparency issues by launching the first onestop-shop ETF platform through a MTF structure with unique features, like NAV trading.” Company: Euronext Name: Benjamin Fussien Email: bfussien@euronext.com Web: www.euronext.com Address: 14 place des Reflets 92054 Paris La Défense Cedex Phone: +331 7078 2894
Best Performing Large ETF: ChinaAMC CSI 300 & Best China ETF Manager 2016
China Asset Management (Hong Kong) Limited was established in September 2008 as a wholly-owned subsidiary of China Asset Management Co., Limited to strategically develop ChinaAMC’s offshore business and investment capabilities. We invited Vincent Chen to tell us more.
ChinaAMC is one of the largest asset management firms in China with assets under management of USD 148.25 billion as of 31 December 2015. As one of the first Chinese asset management companies established in 1998, ChinaAMC has been dedicated to providing investment services for global investors, with a focus on the Greater China region. We manage long-only funds, long-short hedge funds, exchange-traded funds, quantitative funds, as well as fixed income products for institutional and individual clients in Asia Pacific, Europe and the United States. Our head office is located in Beijing with branches in Beijing, Shanghai, Qingdao, Nanjing, Hangzhou, Guangzhou, Shenzhen and Chengdu and subsidiaries in Hong Kong.
and industry associations to gauge the macro economic trends and policy directions. In addition, our extensive on-the-ground research platform gives us a 360-degree view for a diversified range of firms including large, mid and small-cap companies. Going forward, we will continue to develop robust investment strategies and innovative investment products for our valuable customers worldwide.
ChinaAMC(HK) is licensed by the Hong Kong Securities and Futures Commission to engage in Type 1 (dealing in securities), Type 4 (advising on securities) and Type 9 (asset management) regulated activities. We offer high-quality investment products and services for domestic and overseas investors based on our comprehensive investment research. Here in ChinaAMC(HK) we believe in “Research creates value”. We established strict investment process and systems in order to obtain stable and reliable return through professional and prudent investments. Alongside our parent company we have an investment and research team of over 200 experienced investment professionals in total from domestic and overseas markets. On average, our fund managers have over 10 years of industry experience. Through our carefully designed investment process, our portfolio managers benefit from the collective intelligence of our investment research while maintaining independent investment decisions. Our investment professionals regularly communicate with business leaders, government officials, trade bodies
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Company: China Asset Management (Hong Kong) Limited Name: Vincent Chen Email: Vincent.chen@chinaamc.com Web Address: http://www.chinaamc.com.hk Address: 37/F, Bank of China Tower, One Garden Road, Hong Kong Telephone: +852 3406 8611
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11 i-invest ETF Awards 2016
Best Smart Beta ETF Provider & Best New ETF: Lyxor Smart Cash UCITS ETF
Lyxor Asset Management is the 3rd largest and longest standing European ETF provider, with more than $51.9bn in ETF assets under management. We spoke to Arnaud Llinas, Head of ETFs & Indexing at Lyxor to gain an insight into the services the firm provides in this area.
Standing among the most experienced ETF providers, Lyxor ETF ranks 3rd in Europe with more than $51.9bn of ETF assets under management and 2nd in terms of liquidity. With more than 220 ETFs listed on 13 regulated exchanges across the world, Lyxor provides institutional and retail investors with a highly flexible opportunity to diversify their allocation across all asset classes (equities, bonds, money markets, commodities). With the Lyxor ETF quality charter adopted in 2011, Lyxor ETF also commits to deliver the highest standards in terms of index tracking quality, risk control, liquidity and transparency.
Looking to the future, in 2016 Lyxor will continue to reinforce its offering within fixed income and Smart Beta. We are delighted with the growth in our assets as it clearly illustrates our strategy is resonating with investors: to offer a comprehensive range of the most efficient products for our clients. In order to maintain this success, we will keep innovating in order to respond to the needs of our clients, and to help them adapt to the ongoing challenges posed by financial markets. Company: Lyxor Asset Management Name: Arnaud Llinas, Head of ETFs & Indexing at Lyxor Asset Management Web Address: www.lyxoretf.com
Since 2001 when we launched our first ETF, our aim has always been the same; to create highly efficient funds that track precisely, and trade efficiently in all market conditions. This is our goal for all of our funds, regardless of asset class, region or investment strategy. This means that no matter how far off the beaten track you go, or how sophisticated the investment strategy you choose, you know that our funds are designed to perform. Our ETF exposures are offered in a wide range of asset classes including equities, bonds, commodities and cash. Geographic exposures range from global, to regional, to single-countries across both developed and emerging markets, and we have a comprehensive range of sector funds too. Our Smart Beta ETF range is designed to deliver specific outcomes for investors, including enhancing returns, reducing risk, and targeting income.
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Best European Equity ETFs Market Maker
Optiver is an international trading firm operating at the forefront of trading and technology. We invited Maarten Botman to talk us through the firm’s history and how this has helped it to achieve its current, industry leading success. Optiver is a market maker and principal trading firm with a 30-year history of profitable trading. We have been trading in ETFs since 2006, and are very active in the wholesale market and trade with a wide range of professional counter-parties including investment funds, private banks and indeed other dealers. Founded to improve the market for all participants, the firm has deep roots in the electronic pricing, analysis and trading of listed products. Our core focus is on the four C’s: Consistency in Competitive Pricing with No Commissions charged while being Counterparty oriented. The ETF market is seeing a boom in new players which are a mix of new companies and re-focused options market makers. We believe the new depth in the market offers choice to investors and new trading opportunities for the whole investment community will emerge as the market matures. Within the wider financial industry, consolidation is a key factor, with established dealers being forced to down size and exit existing business lines while smaller firms continue to thrive under the new regulatory environment. Optiver itself, having never had a poor performing year in its history, has seen a solid financial performance across business lines over the past 12 months. Moving forward, we have just opened our London office, which will provide us with exciting new growth opportunities. In addition, we continue to broaden our product range and will be fully up and running on a broad range of commodity ETFs soon, which will offer our clients more choice and provide us with the chance to expand into this rapidly growing sector. Company: Optiver
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Pacer ETF Distributors, sponsored by Pacer Financial, is an innova¬tive investment firm specialis¬ing in strategy-driven investment products designed to meet specific client needs. We interviewed Sean O’Hara, President, Pacer ETF Distributors who talked us through the Pacer ETF family of product offerings and how each pro¬vide a unique solution. Pacer ETF Distributors, sponsored by Pacer Financial, offers a wide range of strategy driven ETFs built to be solutions for client needs. The financial industry is about helping investors put their money to work in the best way for them. With that being said, we design all of our products with the investor in mind. We aim to create new innovative solutions to address common concerns. So far, we’ve created products to help clients with risk management, currency hedging and sustainable dividends. Our award winning Pacer Global High Dividend ETF (PGHD), for example, aims to address the needs of older investors who are nearing or in re¬tirement and looking for sustainable income. By using both free cash flow yield and dividend yield, we screen for what we believe are the most sustainable dividend paying companies. Without free cash flow, a company will not be able to pay their dividends and may also have underlying finan¬cial issues which need to be addressed Looking ahead, the future is an exciting time for Pacer, as we create a new range of ETFs to meet client needs. We believe that this particu¬lar market is only going to keep growing, and it is my prediction that the value for the US ETF market could grow from $2 trillion to $20 trillion over the next ten years. Although larger firms will undoubtedly dom¬inate the ETF market in the future as they do now, there is more than enough room for nimble, creative and flexible firms such as ours. The need to innovate and create unique invest¬ment products that fulfill client needs is what drives us, and will be our focus in the coming months and years. Company: Pacer ETF Distributors Name: Sean O’Hara, President Email: info@pacerfinancial.com Phone: 877-722-3748 Website: http://www.paceretfs.com 16 i-invest ETF Awards 2016
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Best New ETF Issuer 2016 & Most Innovative Large Cap ETF: PTLC, Best Eurozone ETF (Since Inception): PAEU & Best New Strategy Driven ETF: PGHD 17 i-invest ETF Awards 2016