In the coming weeks, we will publish a series of insights on financial innovation discussing several powerful secular trends relating to financial technology/innovation and its impact on the global financial services sector. We will also review how these trends influence the investment strategy of the Hamilton Financials Innovation ETF (HFT). Part I: Can Standalone Digital Banks Disrupt the Incumbents? Part II: Four Themes Driving Innovation in…
Insights: United States
U.S. Banks: The Return of M&A – A Clear Sign of Bankers’ Conviction in the Recovery
All values in U.S. dollars unless otherwise noted. As the year draws to a close, the whipsaw nature of 2020 will not soon be forgotten. When the pandemic struck earlier this year and businesses shuttered under direct orders by various governments, how long and how deep the resulting global economic downturn would be was next to impossible to forecast with any sense of accuracy. As businesses…
Hamilton Financials Innovation ETF: Invest in Digital Leaders Reshaping the Financial Sector
When most investors think of the financial sector, they think about the traditional financial subsectors, like commercial banks, investment banks, and insurance. However, the rapid advancement of technological innovation has created an entirely new category of financials and transformed others. In our view, this category has become so large and established that it should comprise a material portion within all investors’ financial sector equity allocations. Not…
Global Financials: The Most Attractive/Important Investment Themes in 2021
Hamilton Global Financials ETF (HFG), which launched on June 26, 2020, is focused on investing in high quality global financial stocks with strong balance sheets, diversified income streams and exposure to favorable, medium- and long-term cyclical and secular trends. This focus aims to provide Canadian investors with diversified exposure to the most attractive themes within the global financial sector while maintaining a volatility profile not materially…
Financials: Does COVID-19 Represent a Growth Scare, Credit Event or Crisis?
Since we launched our first ETF in January 2016, there have been four significant macro corrections in four years. None of those large and painful corrections represented a crisis, insofar as the declines did not represent a threat to the solvency of the financial sector, either from a lack of liquidity or the destruction of capital. Rather, they were related to the market rapidly (and, in…
One Chart: When/Where the Canadian Banks Spent US$32 bln on U.S. Banks
All Canadian bank investors know that expansion into the U.S. personal and commercial (“P&C”) banking sector remains the focal point of capital deployment for the Canadian banks. In fact, US banking has been – by far – the largest destination of capital deployment since 2004 (when TD Bank acquired a majority stake in Banknorth), with the Canadian banks having spent a huge US$30 bln. The chart…
One Chart: U.S. Bank M&A Doubles in 2019 (and Why We Expect More)
In the 10+ years since the global financial crisis, deal values in U.S. bank M&A have been slow to reach pre-crisis levels. This is notable since in the nearly 25 years preceding the financial crisis bank M&A was an important theme (particularly between 1995 to 2007) as the chart below highlights. Note to Reader: This Insight includes references to certain Hamilton ETFs that were active at…
U.S. Bank M&A: Another Accretive MOE, Another Positive Market Reaction
On Monday, this year’s third (sizable) U.S. bank merger-of-equals (“MOE”) was announced, continuing a trend we expected following similar transactions early in 2019. We have previously written that after a multi-year period of muted merger activity that U.S. bank consolidation – particularly among mid-cap banks – was poised to accelerate. We have cited this theme as impacting the U.S. mid-cap financials sector generally and the banking…
U.S. Mid-Caps: Yield Curve False Alarm? 9th Straight Quarter of 10%+ EPS Growth
Since Hamilton U.S. Mid-Cap Financials ETF (USD) (ticker: HFMU.U) was launched in September 2017, the yield curve has flattened. Some market participants have taken this broader market signal to be an accurate predictor of a recession and by extension a credit cycle for banks. However, those interpreting the flattening of the yield curve (spread between the yield on the US 10 year and the Fed funds…
Notes from Dallas: Big Things Happen Here
We recently returned from a visit to Dallas (our third in four years) where we met with eight banks operating in the Lone Star State. Five of the eight have footprints beyond Texas, and hence offered a fuller picture of the attractiveness of the Texas economy and business outlook (hint, there’s a reason they’re in Texas). Of the banks we met, three are holdings in our…
A Day in the Life of the U.S. Financials – Notes from New York
Three days in New York gave us the opportunity to meet with a broad-based group of financial services companies, largely based in the U.S., but several operating globally. Included in the mix were several holdings of the Hamilton Global Financials Yield ETF (ticker: HFY) and the Hamilton U.S. Mid-Cap Financials ETF (USD) (ticker: HFMU.U), both of which invest in the broader financials services sector. The former…
What U.S. Investment Bankers and Banks are Saying about M&A
At Hamilton ETFs, the prospects for M&A is one the supporting factors for our investment thesis for the U.S. mid-cap banks, in which both the Hamilton Global Bank ETF (ticker: HBG) and Hamilton U.S. Mid-Cap Financials ETF (USD) (ticker: HFMU.U) are heavily-weighted[1]. Note to Reader: This Insight includes references to certain Hamilton ETFs that were active at the time of writing. On June 29, 2020, the…