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Invesco Canada launches two new Thematic Technology ETFs focused on Nasdaq

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After the huge success of Cathie Woods and the ARK ETFs in 2020, rival investment managers have been quick to characterize technology funds as “Innovation” or “Disruption” products.

Such was the case on Thursday,  as Invesco Canada Ltd.  announced the launch of two new exchange-traded funds (ETFs) offering Canadian investors exposure to several relevant technology themes. This follows the February announcement from Franklin Templeton of the Franklin Innovation Fund (FINO), which appeared on the Hub under the headline Invest in Innovation, a Driver of Wealth Creation.

Both the words “Innovative” and “Disruptive” appear in the top of the press release for the debut of the Invesco NASDAQ Next Gen 100 Index ETF (QQJR and QQJR.F) and the Invesco NASDAQ 100 Equal Weight Index ETF (QQEQ and QQEQ.F. As the release says, these funds “build on the innovative solutions offered by Invesco and Nasdaq, allowing clients several distinctive entry points to own the disruptive companies listed on The Nasdaq Stock Market.”

Invesco also announced the launch of CAD Units of Invesco NASDAQ 100 Index ETF (QQC).

The Invesco innovation suite was launched in October 2020 and is just now expanding to Canada, with  the following TSX-listed ETFs that started trading on the TSX today (Thursday, May 27). Of the three below, I find the equal weight Nasdaq 100 offering the most interesting:

  • Invesco NASDAQ Next Gen 100 Index ETF (QQJR and QQJR.F)
  • Invesco NASDAQ 100 Equal Weight Index ETF (QQEQ and QQEQ.F).
  • Invesco NASDAQ 100 Index ETF (QQC and QQC.F)
Pat Chiefalo

The innovation play was also highlighted in the following quote attributed to Pat Chiefalo, Head of Canada, Invesco ETFs & Indexed Strategies: “The launch of two new Invesco Nasdaq ETFs reaffirms the commitment of Invesco’s Canadian ETF business to providing our clients with products that access the themes and companies at the forefront of innovation … Now Canadian investors can choose several unique ways to gain exposure to the category-defining companies listed on The Nasdaq Stock Market.”

There are of course several existing rival plays on the top 100 Nasdaq companies apart from Invesco’s famous QQQs. Incidentally, Invesco says it recently changed the name of the Invesco QQQ Index ETF to the Invesco NASDAQ 100 Index ETF, dropping the management fee to 0.20% of NAV to “make it the most cost-effective ETF in Canada tracking the Nasdaq 100 Index.”

By contrast, the new QQJR and QQJR.F are relatively unique: it tracks the Nasdaq Next Generation 100 Index, which includes the “next 100” non-financial companies listed on The Nasdaq Stock Market, outside of the Nasdaq 100 Index, in a mid-cap ETF. Continue Reading…

Why choose Joint Life Insurance?

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Dundas Life

By Greg Rozdeba

Special to the Financial Independence Hub

When considering life insurance, the first thing that comes to mind is coverage for a single person. While that is the most commonly used option, there are many variants of the policy that you can use.

One of these variants is the joint life insurance policy. It is an option that covers two people instead of the one offered by a standard policy. These policies are usually targeted towards couples.

While having two separate policies is better overall, joint life insurance can come in handy in certain circumstances.

There are some important reasons for choosing joint life insurance. One of these is if your spouse does not qualify for an individual policy. It can also come in handy if you have people who depend on you or if you want to leave an inheritance for your heirs.

Most joint insurance policies are permanent and last your entire life. They contain an investment component that earns interest.

There are also a few joint policies that can be set up to last a certain amount of time but are rare.

Differences between Single and Joint Insurance policies

A single-life insurance policy provides coverage for a single soul, which is usually you or your significant other. The policy pays out if that soul passes away.

Conversely, a joint insurance policy provides coverage for 2 souls. It pays out if one of the policyholders passes away.

Joint insurance policies pay out only once when one of the covered individuals passes. This leaves the other person without coverage. Joint insurance policies cost more but provide more protection.

How do Joint Life Insurance policies work?

Joint life Insurance policies provide coverage for 2 people within the same policy. This is a cheaper alternative to buying two different policies. It also has its own unique set of bonuses.

Since it is cheaper, a joint policy will pay out only once, usually when the first person dies. In some cases, the policy can also pay out if one person is diagnosed with a terminal illness. The doctor must specify that person has less than a year to live.

The policy ends instantly when it pays out once. This leaves the other partner uncovered. This can be a problem if the surviving person is old and cannot afford a new policy.

Both the partners in a joint insurance policy are usually insured for the same amount. This ensures the payout is also similar when either person passes. Continue Reading…

Equal Weight Indexing during Economic Recovery

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By Hussein Rashid, Invesco Canada

Special to the Financial Independence Hub

2020 was a year for the history books: especially from a finance perspective. With COVID-19 ripping throughout the globe, we saw equity markets decline rapidly as several countries closed their borders.

At the same time, however, we saw some companies flourish as people spent more time at home. Companies like Apple, Microsoft, and Google1 shined brightly and became larger than ever before. Central banks globally introduced measures that aided this appreciation by reducing rates to record lows, fueling most growth-oriented stocks upward at a rapid pace.

However, over three months into 2021, we are now seeing signs of recovery towards normalcy, with continued supportive measures by many central banks and governments, along with a growing number of people being vaccinated.

So, what does that look like from a market leadership perspective? As the recovery unfolds and economic activity accelerates, we would expect market leadership to align with that of the left column of the chart above.

We have already seen a steepening yield curve with longer-dated bond rates rising:  this could temper the strong run up in growth-oriented stocks. Near the end of last year, the move from growth stocks to more value-oriented cyclical stocks, and the move from large-cap stocks to small/mid-cap stocks started to occur. Many of these stocks, especially names in the S&P 500®, will tend to benefit more from the economy and society reopening. Continue Reading…

Fixed Income: Down but not Out

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Franklin Templeton Investments: Licensed from GettyImages

(Sponsor Content)

While many equity markets have performed well year to date, the last few months have not been as kind to fixed income investors. Last quarter, fixed income markets recorded some of the worst returns in 40 years as central banks and governments worldwide continued to rack up a mountain of debt in ongoing support of the global economy and consumers during the COVID-19 pandemic. But don’t despair; as Franklin Bissett fixed income portfolio manager Darcy Briggs points out in this Q&A, the market still offers value — if you know where to look.

 

Q: How would you describe the current environment for Canadian fixed income?

After seeing significant returns in Canadian fixed income last year, we expect more subdued performance in 2021. Given the year’s starting point of very low interest rates and tight credit spreads, we see corporate credit as offering the best risk-adjusted return opportunities in the current environment. As active, total return managers focused on generating income and capital gains, we know bond selection will remain important this year. Small interest rate moves can lead to significantly different outcomes for different fixed income sectors. Uncertainties remain high, and we are seeing a wide range of forecasts on how the balance of 2021 will unfold. Although interest rates have been up as much as 100 basis points so far this year, we think they may have overshot, as happens from time to time. We would not be surprised if they drifted lower later in the year. Realistically, we expect the path ahead to be a little messy.

Source: FactSet, Franklin Templeton

How so?

This recession/quasi-depression was prompted by a dramatic health crisis and the resulting government-mandated shutdown; it was not caused by normal business cycle dynamics. While fiscal and monetary policy have prevented a full-blown financial crisis, those tools have limited ability to solve the current recession. We believe it will end once the pandemic subsides and the economy fully opens, functioning in a more familiar pre-pandemic way. Vaccines are key to the pace of progress. Continue Reading…

Retired Money: How Bond ETF investors can minimize risk of rising rates

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My latest MoneySense Retired Money column has just been published: click on the highlighted text to retrieve the full column: Should investors even bother with Bonds any more?

In a nutshell, once again pundits are fretting that interest rates have been so low for so long, that they inevitably must soon begin to rise. And if and when they do, because of the inverse relationship between bond prices and interest rates, any rise in rates may result in  capital losses in the value of the underlying bonds.

In practice, this means choosing (or switching) to bond ETFs with shorter maturities: the risk rises with funds with a lot of bonds maturing five years or more into the future, although of course as long as rates stay as they are or fall, that can be a good thing.

As the column shows, typical aggregate bond ETFs (like ETF All-Star VAB) and equivalents from iShares have suffered losses in the first quarter of 2021. Shorter-term bond ETFs that hold mostly bonds maturing in under five years have been hit less hard. This is one reason why in the US Vanguard Group just unveiled a new Ultra Short Bond ETF that focuses on bonds maturing mostly in two years or less.

The short-term actively managed bond ETF is called the Vanguard Ultra Short Bond ETF. It sports the ticker symbol VUSB, and invests primarily in bonds maturing in zero to two years. It’s considered low-risk, with an MER of 0.10%.

Of course, if you do that (and bear the currency risk involved, at least until Vanguard Canada unveils a C$ version), you may find it less stressful to keep your short-term cash reserves in actual cash, or daily interest savings account, or 1-year or 2-year GICs. None of these pay much but at least they don’t generate red ink, at least in nominal terms. Continue Reading…