Widely regarded as ‘the father of modern finance’, Eugene Fama’s work is highly regarded in the capital markets. His work is also the basis for Canadian firm SmartBe Wealth’s four new ETFs.
Fama’s work in portfolio theory, asset pricing, and efficient markets eventually earned him the Nobel Memorial Prize in Economic Sciences jointly with Robert J. Shiller and Lars Peter Hansen in 2013. In 2019, the Research Papers in Economics project considered Fama the 9th-most influential economist of all-time.
Needless to say, Fama has quite the resume and it’s not a bad place to start for ETF strategies. The ETFs utilize factor-based strategies, namely momentum and value.
The funds are segmented via a quantitative and qualitative approach to both factors.
Giving the Investing Public What They Want
Statista data there is no shortage of ETFs in current times. Over 7,600 funds exist across the globe. Their assets are heading towards the $8 trillion mark worldwide.
The ETF market in Canada is still in its nascent stages. Yet with the introduction of new funds like those from SmartBe Wealth, the investing public is getting what they wished for.
“The community has spoken and we listened,” said Rod Heard, co-founder and CEO of SmartBe Wealth, in a Wealth Professional article. “These funds are unique in Canada and represent a new opportunity for Canadians to add concentrated factor exposure to their portfolios.”
The Canadian firm has added a special company-specific twist.
“We’re doing a couple things that are special; we’re using different ways to determine value, to determine cheapness," said Heard. “Almost all of the other funds use price to book and they line the 100 Canadian companies up and figure out which are the most expensive, which are the cheapest, and then buy the cheapest ones.”
While the Canadian market still has a ways to go, the introduction of these new funds is a giant step forward.
“The U.S. market appears to be a few years ahead of the Canadian market when it comes to the widespread adoption of ETFs and strategies based on scientific investing,” said Wes Gray, CEO of the research-focused asset management firm Alpha Architect, which helped SmartBe Wealth develop the ETFs. “We buy into SmartBe’s vision of creating the leading quantitative investment boutique in Canada and partnered with SmartBe because of our shared values in transparency and education.”
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