Arrow Capital launches its first ETF in Canada

Dec 5th, 2017 | By | Category: ETF and Index News

Arrow Capital Management has launched the Exemplar Investment Grade ETF (CORP CN), an actively managed fixed income ETF aimed at investors looking to protect their portfolios during periods of rising interest rates. Listed on Toronto Stock Exchange, the fund marks Arrow Capital’s first foray into the ETF provider space.

Arrow Capital Management ETFs

The fund is Arrow Capital’s debut ETF launch.

The fund focuses on investment grade bonds primarily in Canada and employs a macro overlay to enhance returns and reduce volatility. The unconstrained nature of the fund allows the fund’s managers the flexibility to manage duration and mitigate risk.

The fund seeks to remove the interest rate exposure of its underlying corporate bonds, thereby protecting investors from capital losses due to rising rates. It seeks to generate attractive risk-adjusted returns with low volatility and a focus on capital preservation.

According to Arrow Capital, the fund may suit conservative investors who are seeking monthly income with the potential for additional capital appreciation. The fund may also complement a traditional long-only stock and bond portfolio.

The ETF serves as an additional access point to the firm’s existing mutual fund – the Exemplar Investment Grade Fund – which has been around since mid-2014.

“We want to provide investors with greater accessibility to our bond products,” said Mark Purdy, managing director & chief investment officer of Arrow Capital. “The new ETF offering complements our existing lineup and allows investors to choose a product that best fits their needs.”

The fund’s management expense ratio is 0.80%.

Arrow Capital is the trustee, manager, and promoter of the fund, while East Coast Fund Management will act as the portfolio advisor for the fund.

The US Federal Reserve is widely expected to further increase interest rates when they meet later in the month on 13 December. Probabilities derived from the Federal Funds Futures market imply a 90.2% probability that the US base rate will be increased to 1.25-1.50%, as of the 4 December 2017. Two increases have already occurred thus far in 2017 in March and June.

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