Evolve launches financials ETF

Evolve Funds Group Inc.’s Canadian Banks and Lifecos Enhanced Yield Index Fund began trading Feb. 2 on the Toronto Stock Exchange.

“As interest rates start to rise throughout this year, it should be positive for both the banks and the insurance companies,” Evolve ETFs CEO Raj Lala said in an interview. “For the banks, because of the overall increase in lending revenue, and for the insurance companies [because] they oftentimes take their premiums and invest in fixed-income instruments. So as rates increase, they can generate higher revenues.”

The new fund trades under the BANK ticker symbol. With a management fee of 0.6%, the fund gives investors exposure to the 10 largest Canadian banks and insurance companies (currently the Big Six, Power Corp., Manulife Financial Corp., Sun Life Financial Inc. and Great-West Lifeco Inc.), rebalanced quarterly on an equally weighted basis.

The fund is intended for investors willing to take the risk associated with a levered exposure (up to 125%) to Canadian core financials equities. The fund includes covered-call options on up to 33% of the portfolio securities in the portfolio.