Insights: Uncategorized

In our September 4th, 2018 ETF Manager Comment “HFMU.U Outperforms U.S. Large-Cap Financials in Year #1 Rising 15%, Despite Two Formidable Obstacles” we discussed the performance of the ETF in its first year. However, as a follow up, we thought it would be helpful to address risk and volatility of returns. Using monthly data, the U.S. Large-Cap Financials index declined 5 straight months (February to June)…

Up ~15%, Despite Two Formidable Obstacles Our Hamilton Capital U.S. Mid-Cap Financials ETF (USD) rose 15% in its first year, outperforming the U.S. large-cap financials index (S5FINL Index). The sheer earnings growth of HFMU.U holdings supported this outperformance despite two very formidable obstacles, both of which we believe are unlikely to recur. Of importance, HFMU.U achieved this outperformance with significantly lower drawdowns and volatility. What were these…

900 bps Ahead of U.S. Large-Cap Financials In Q2-2018, the holdings in the Hamilton Capital U.S. Mid-Cap Financials ETF (USD) (HFMU.U) have recorded year-over-year portfolio-weighted EPS growth of a robust 35%, a full 900 bps ahead of the 26% EPS growth reported by the U.S. large-cap financials index. This is the fourth consecutive quarter since its inception that earnings for HFMU.U’s holdings have outpaced the U.S.…

In Q1-2018, the holdings in the Hamilton Capital U.S. Mid-Cap Financials ETF (USD) [HFMU.U] have recorded year-over-year portfolio-weighted EPS growth of a robust 41%, which is well ahead of the 35% EPS growth reported by the U.S. large-cap financials. Last quarter – Q4-2017 – HFMU.U’s holdings outgrew the large-caps by 10% (i.e., 18% for HFMU.U versus 8% for the large-cap index). Perhaps more meaningful, excluding the…

With 96% of the fund having reported Q4-2017, the holdings in Hamilton Capital U.S. Mid-Cap Financials ETF (USD) (HFMU.U) have recorded year-over-year portfolio weighted EPS growth of over 18%, which is more than double the 7.6% growth reported by the U.S. large-cap Financials (100% reported). Last quarter – Q3-2017 – HFMU.U’s holdings outgrew the large-caps by 11% (i.e., 12% for HFMU.U versus 1% for the large-cap…

With improving GDP growth and monetary policy backdrop in Europe and lower bank valuations, we have increased the exposure to high quality European banks in the Hamilton Capital Global Financials Yield ETF (HFY). Specifically, we (i) increased European bank exposure by ~700 bps, (ii) reduced “other financials” in the U.S. by ~200 bps, and (iii) reduced European insurance by ~400 bps. As a result of these…

Per our comment published today, “HFY and HBG Manager Comment: Reducing Australian Bank Exposure on Rising Regulatory Risk”, we have recently reduced HFY’s Australian exposure following the government’s launch of a Royal Commission into the Australian financial services sector. This change was part of a wider review of the portfolio which also saw HFY’s REIT exposure reduced by over half to ~7%. At the same time,…

With last week’s announcement of the Royal Commission on the Australian financial sector, which will likely have an emphasis on the largest banks, we have opted to reduce our weighting to Australia. Specifically, in the Hamilton Capital Global Bank ETF (HBG), we recently reduced the Australian banks to under 5% (from ~9%), replacing them with U.S. banks. In the Hamilton Capital Global Financials Yield ETF (HFY),…

November 20, 2017 by Hamilton Capital The holdings within the Hamilton Capital U.S. Mid-Cap Financials ETF (HFMU.U) reported a very strong Q3, posting portfolio-weighted earnings growth of ~12% Y/Y. This compares to just 1% Y/Y for the U.S. financials[1]. The two most important factors contributing to HFMU.U’s much higher growth were: (i) its substantial overweight position in U.S. mid-cap banks (which are largely unrepresented in the Index, but…

Supported by improving global growth and a more positive monetary policy backdrop, sentiment for the global financials has improved over the last year. In our view, the sector is “under-earning” in a low rate environment, largely in the form of lower margins. With monetary policy slowly beginning to normalize, the potential for margin expansion to support higher EPS growth, and therefore stock prices is becoming increasing…

January 25, 2017 The Hamilton Capital Global Bank ETF (HBG) recently finished its first full year, increasing in value by ~28% (including dividends). Importantly, the ETF outperformed its benchmark, the KBW Global Bank Index (CAD) by almost 12%[1]. Not only did HBG generate significant outperformance relative to the global banks, it also managed to accomplish this while experiencing comparatively lower drawdowns. Currency hedging for HBG is…

The Hamilton Capital Global Financials Yield ETF (HFY) is scheduled to launch on February 7th, 2017. The objective of the fund is to offer attractive returns from regular/quarterly distribution income and capital appreciation by investing in global financials. Put differently, the aspiration of the fund is for the ETF to generate “REIT-like yields, with positive rate sensitivity”. HFY is a global ETF which means its investable…