Morningstar Magazine - December 2017/January 2018 - 25

Canada Sees Record
ETF Launches
AMERICAS

Canada
September saw the launch of 32 exchange-traded
funds in Canada, more than any previous
month-and by mid-October, another 18 ETFs had
been listed. This activity is not something to
necessarily celebrate, though, as new launches
increasingly clutter the landscape, making it more
difficult to parse. There are now over 650 ETFs
trading in Canada, some of which are more useful
to the average investor than others. The ETFs
launched in September are no different.
First, starting with the more practical listings,
is RBC's launch of seven broad-based index ETFs.
Exposure to these markets largely already exists
with other ETF providers, but RBC's low-cost
offerings still have appeal. For instance, the RBC
Canadian Equity Index ETF provides exposure
to the FTSE Canada All Cap Domestic Index for a
management fee of 5 basis points. Core Canadian
equity offerings from Vanguard and iShares
also come in around this price point, though, so
there is little differentiation here.
A decent number of actively managed ETFs
also launched during the month. IShares and the
mutual fund manager Dynamic paired to
launch three funds. Evolve Funds partnered
with institutional manager Foyston, Gordon
& Payne to run an active preferred share strategy.
First Asset, which is owned by CI Investments,
launched an active global dividend fund
run by CI subsidiary Cambridge. And last, PIMCO,
which already had active ETFs in the United
States, launched two here in Canada, including
PMIF, which is the manager's popular monthly
income fund in ETF format.
Broadly speaking, active ETFs should be evaluated
much the same as active mutual funds. Namely,
look for deep teams and/or long-tenured managers
that have demonstrated a consistent approach
to adding value after fees. The PIMCO strategies
would check the boxes in this regard.

TRE NDS

Bitcoin Bubble?
In the August/September 2012 issue of the
magazine, James X. Xiong, head of quantitative
research with Morningstar Investment
Management, explored the log-periodic power
law model and how it can identify assetprice bubbles and predict their crash. "Positive
feedback and herding produce runaway
prices until the deviation from equilibrium
is so large that the market is unstable and has
a high probability to crash," Xiong wrote.
The LPPL model, the theory goes, can pick
up these deviations ahead of time. Xiong used
the art market in China as an example

("The Chinese Art Market and the Origin
of Bubbles"). In September 2012, Xiong put Apple
AAPL through the LPPL model and showed
that the LPPL model did a good job in forecasting
the stock's subsequent crash. (We published the
results in the December/January 2013 issue.)
From Nov. 2, 2016, to Oct. 14, 2017, bitcoin's
price increased to $5,809 from $742, a spectacular
gain of 683% in less than a year. On Oct. 17,
Xiong put bitcoin through the LPPL model. The
results indicate a crash is around the corner.

Bitcoin Price vs. LPPL Model

Bitcoin close price

Log-periodic power law model
6,000
USD
5,000
4,000
3,000

2,000

The log-periodic power law model
forecasts a bitcoin crash late this year.

1,000

0
11/2016

01/2017

03/2017

05/2017

07/2017

09/2017

11/2017

Sources: Morningstar, Coindesk.

Linear (Number of Snow
Days)to see aRolling
Expect
steady10-Year
stream Average
of launches
ThereNumber
was alsoofaSnow
mix ofDays
strategic-beta,
sector-specific, and thematic ETFs launched.
moving forward: In terms of the percentage of total
Among them are Evolve's automobile
assets invested in ETFs versus mutual funds,
innovation ETF and cybersecurity ETF,
Canada still lags the U.S.
both of which will likely only appeal to traders
Jeffrey Bunce is a senior investment analyst with
and thematic investors. Be mindful of
Morningstar Investment Management in Canada.
the targeted exposures and risks these types
of ETFs contain.

global.morningstar.com/Morningstarmagazine

25


http://global.morningstar.com/Morningstarmagazine

Table of Contents for the Digital Edition of Morningstar Magazine - December 2017/January 2018

Contents
Morningstar Magazine - December 2017/January 2018 - Cover1
Morningstar Magazine - December 2017/January 2018 - Cover2
Morningstar Magazine - December 2017/January 2018 - 1
Morningstar Magazine - December 2017/January 2018 - 2
Morningstar Magazine - December 2017/January 2018 - Contents
Morningstar Magazine - December 2017/January 2018 - 4
Morningstar Magazine - December 2017/January 2018 - 5
Morningstar Magazine - December 2017/January 2018 - 6
Morningstar Magazine - December 2017/January 2018 - 7
Morningstar Magazine - December 2017/January 2018 - 8
Morningstar Magazine - December 2017/January 2018 - 9
Morningstar Magazine - December 2017/January 2018 - 10
Morningstar Magazine - December 2017/January 2018 - 11
Morningstar Magazine - December 2017/January 2018 - 12
Morningstar Magazine - December 2017/January 2018 - 13
Morningstar Magazine - December 2017/January 2018 - 14
Morningstar Magazine - December 2017/January 2018 - 15
Morningstar Magazine - December 2017/January 2018 - 16
Morningstar Magazine - December 2017/January 2018 - 17
Morningstar Magazine - December 2017/January 2018 - 18
Morningstar Magazine - December 2017/January 2018 - 19
Morningstar Magazine - December 2017/January 2018 - 20
Morningstar Magazine - December 2017/January 2018 - 21
Morningstar Magazine - December 2017/January 2018 - 22
Morningstar Magazine - December 2017/January 2018 - 23
Morningstar Magazine - December 2017/January 2018 - 24
Morningstar Magazine - December 2017/January 2018 - 25
Morningstar Magazine - December 2017/January 2018 - 26
Morningstar Magazine - December 2017/January 2018 - 27
Morningstar Magazine - December 2017/January 2018 - 28
Morningstar Magazine - December 2017/January 2018 - 29
Morningstar Magazine - December 2017/January 2018 - 30
Morningstar Magazine - December 2017/January 2018 - 31
Morningstar Magazine - December 2017/January 2018 - 32
Morningstar Magazine - December 2017/January 2018 - 33
Morningstar Magazine - December 2017/January 2018 - 34
Morningstar Magazine - December 2017/January 2018 - 35
Morningstar Magazine - December 2017/January 2018 - 36
Morningstar Magazine - December 2017/January 2018 - 37
Morningstar Magazine - December 2017/January 2018 - 38
Morningstar Magazine - December 2017/January 2018 - 39
Morningstar Magazine - December 2017/January 2018 - 40
Morningstar Magazine - December 2017/January 2018 - 41
Morningstar Magazine - December 2017/January 2018 - 42
Morningstar Magazine - December 2017/January 2018 - 43
Morningstar Magazine - December 2017/January 2018 - 44
Morningstar Magazine - December 2017/January 2018 - 45
Morningstar Magazine - December 2017/January 2018 - 46
Morningstar Magazine - December 2017/January 2018 - 47
Morningstar Magazine - December 2017/January 2018 - 48
Morningstar Magazine - December 2017/January 2018 - 49
Morningstar Magazine - December 2017/January 2018 - 50
Morningstar Magazine - December 2017/January 2018 - 51
Morningstar Magazine - December 2017/January 2018 - 52
Morningstar Magazine - December 2017/January 2018 - 53
Morningstar Magazine - December 2017/January 2018 - 54
Morningstar Magazine - December 2017/January 2018 - 55
Morningstar Magazine - December 2017/January 2018 - 56
Morningstar Magazine - December 2017/January 2018 - 57
Morningstar Magazine - December 2017/January 2018 - 58
Morningstar Magazine - December 2017/January 2018 - 59
Morningstar Magazine - December 2017/January 2018 - 60
Morningstar Magazine - December 2017/January 2018 - 61
Morningstar Magazine - December 2017/January 2018 - 62
Morningstar Magazine - December 2017/January 2018 - 63
Morningstar Magazine - December 2017/January 2018 - 64
Morningstar Magazine - December 2017/January 2018 - 65
Morningstar Magazine - December 2017/January 2018 - 66
Morningstar Magazine - December 2017/January 2018 - 67
Morningstar Magazine - December 2017/January 2018 - 68
Morningstar Magazine - December 2017/January 2018 - 69
Morningstar Magazine - December 2017/January 2018 - 70
Morningstar Magazine - December 2017/January 2018 - 71
Morningstar Magazine - December 2017/January 2018 - 72
Morningstar Magazine - December 2017/January 2018 - 73
Morningstar Magazine - December 2017/January 2018 - 74
Morningstar Magazine - December 2017/January 2018 - 75
Morningstar Magazine - December 2017/January 2018 - 76
Morningstar Magazine - December 2017/January 2018 - 77
Morningstar Magazine - December 2017/January 2018 - 78
Morningstar Magazine - December 2017/January 2018 - 79
Morningstar Magazine - December 2017/January 2018 - 80
Morningstar Magazine - December 2017/January 2018 - Cover3
Morningstar Magazine - December 2017/January 2018 - Cover4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019winter
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019fall
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019summer
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019spring
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20191201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20181011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20181201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20171011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20171201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20161011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20161201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20151011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20151201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20141011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20141201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20131011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20131201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20121011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120405
https://www.nxtbook.com/nxtbooks/morningstar/investorconference2012
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20121201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20111011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20111201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20101011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100809_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100607_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100405_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20101201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20091011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008fall
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008summer
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007spring
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007fall
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007summer
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008spring
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008catalog
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008winter
https://www.nxtbookmedia.com