Welcome to the Chi-X Investment series, a look at the products and strategies available to trade on the Chi-X exchange. Today, we’re talking active ETFs. What are they how do they work and how do you access them? Joining me in the studio, Camilla Love from eInvest and from Chi-X Ross Pullen. Thank you both very much for coming in.
Thanks Camilla. Can we start with you? eInvest. Tell us about it. Well, eInvest is the newest ETF provider on the block, we provide actively managed ETFs where in asset classes and investment strategies, we believe active management makes sense. We believe also Australians should have the access to really good quality investment opportunities through the exchange. And so that’s where we’ve put together our ETFs in that space. So we’ve also then partnered with really high quality institutional fund managers to bring their quality products to the listed environment. And in these circumstances, what we’re talking about today, we’ve partnered with Daintree Capital, who is a specialist, fixed income and cash manager. And that team is, you know, has 20 years experience investing in this asset class and manages nearly half a billion dollars in assets under management on behalf of institutional and retail clients.
So these are the people who are sitting behind your suite of ETFs. You’ve got ECAS, ECOR and EMAX.
Yeah, that’s right. So we brought a three Active ETFs to the market. We believe that investors are looking for different risk and return profiles within the fixed income space. And so, for example, ECAS. So you mentioned a ECAS, the eInvest Cash Booster Fund. That’s for investors who are looking for a little bit more than just their savings income somewhere to park their cash, really short term, very conservative. The second fund within the suite is a ECOR, the eInvest Core Income Fund. That’s our flagship fund. That fund is a little bit is targeting a greater return to one and a half to two percent above the RBA cash rate. So it has a little bit more risk associated with it, investing mainly in credit securities. And then you’ve got EMAX. So for those investors who are looking, who are happy to take greater volatility and are looking for more income to invest, income maximizer fund is probably something they should look at.
So around about three to four per cent above the RBA cash rate.
Okay, so ETFs have, I think it’s fair to say, exploded in the past couple of years. Why Active Fixed-Income? Why have you focused on this space within the broader asset class?
Well, actually, fixed income is really important right now. And the reason for that is because of the low interest rate environment that we’re in. A lot of investors are investing in ETFs that are passively managed. So following an index. And what that means is they’re sometimes taking on a longer duration risk associated with that index. In the current environment, shorter duration is probably better. And that’s what that three fixed income portfolios provide, a short, shorter duration opportunity for investors.
Ok, Ross, eInvest was the first issuer to sort of launch multiple funds with Chi-X. How did it sort of come about?
Chi-X is Australia’s second stock exchange and so we launched in 2011. Things were a bit small initially. We just traded six stocks. I think on the first day we only traded eight dollars billion. So it’s tiny, but we got to a point sort of in 2015 where we had sort of 15, 20 per cent share of Australian equity trading. We had sort of thirty five, 40 per cent share of the Australian ETS market. And so we reached the point where we wanted to list our own products because we thought that that was where we could still see opportunity for growth. We launched we partnered with Citigroup in 2015 and launch to warrant market, which today we’re about 30 percent of. We launched with Deutsche Bank in twenty seventeen. Trace the custody receipt so US shares street investors can buy Apple. Google settles on the CHESS account just like a normal share. And we reached the point last year where we wanted to launch an ETF market. So we took a look at the assets are available there and identified pretty early on that there was a gap for actively managed fixed income funds. We actually had to work with ASIC for well over a year in order to get that rule framework changed so that it could permit them. And so when we were looking to partner with people, we were looking at guys eInvest maybe the newest active ETF manager in Australia, but they’re also part of the perennial value group. So they’ve got all of those compliance and custody functions and decades of experience behind them. So it was an easy choice for us to eInvest, to partner with.
So the synergies, would you say, between the two groups and what are they?
I think there’s commonalities in this group are a lot of fun. But the choice is Australia’s second stock exchange. And although we’re 20 percent of the Australian market was still the innovator, we’re still the young guys on the block. So we’ve only been around nine years and. Although we’ve got, I think, meaningful market share, we definitely it was more of a startup organization and a growth focus which partnered naturally with the investor group Camilla, just more broadly, I suppose, on these ETFs, where would they normally fit into a portfolio?
I mean, you’ve talked about sort of the environment that we’re in now. Are these you know, are these designed to sort of provide, I guess, some defensiveness in a broader portfolio?
Absolutely. And so that’s where cash and fixed income and investors portfolio. And so if you think about the standard balanced portfolio, which is approximately 60 to 60 percent of growth assets and 40 percent to fixed income and defensive assets, that’s where these the suite of fixed income ETFs fit. And how are they traded your access ETF?
So all of the index funds are available on Chi-X. Chi-X is connected to around 98 and a half per cent of Australian brokers. So, look, to be honest, any Australian stock broker generally can trade by the investor funds. So just add ECOR, ECAS and EMAX to your watchlist and trades on CommSec and all the other brokers, just like BHP shares and Camilla, all the info website, I imagine.
Absolutely. So go to einvest.com.au for more information.
Disclaimer: The Responsible Entity is Perennial Investment Management Limited ABN 13 108 747 637, AFSL: 275101. The Investment Manager is Perennial Value Management Limited ABN 22 090 879 904 AFSL: 247293. This promotional video has been prepared by ETF Investments Australia Pty Ltd trading as eInvest Australia (‘eInvest’) ABN: 88 618 802 912, as the corporate authorised representative of Perennial Investment Management Limited. This promotional video is for information purposes only. Accordingly, reliance should not be placed on this information as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation. While every effort has been made to ensure the information is accurate; its accuracy, reliability or completeness is not guaranteed. Past performance is not a reliable indicator of future performance. You can download the PDS at www.einvest.com.au