We are excited to let our clients and friends know that in the next few weeks, we plan on launching our first actively managed exchange traded fund (ETF). The Fund is called the Rocklinc Principled Equity Fund and will trade under the stock code RKLC on the TSX. We will be utilizing this new fund as a core part of our portfolio allocation for our existing clients, as well as new clients joining Rocklinc. Don’t be surprised if you see an allocation to this new ETF on your year-end statements. The Fund will be actively managed as a value portfolio and typically hold no more than 20 equity positions. The vast majority of the positions will be unique positions with very little crossover with our Rocklinc Partners Fund. This new fund will provide our clients with greater diversification, increased protection of capital and lower volatility.
Here are five reasons why we are launching this new ETF.
1. Capitalize on the Growing Demand for Active ETFs in Canada
Canada leads globally in active ETF adoption, with about 30% of total ETF assets under management being actively managed, compared to just 8% in the US. Launching an active value ETF will allow Rocklinc to tap into this booming market, where investor demand and competition among providers are driving rapid growth. This will allow Rocklinc to increase our assets under management and reach a broader investor base. As our assets grow, we are able to invest more capital back into our business in order to provide higher quality investment services to our clients.
2. Showcase Expertise in Value Investing with High-Conviction Picks
Our value philosophy will focus on undervalued securities. A focused portfolio of 20 or fewer holdings enables Rocklinc to make concentrated, conviction-driven investments based on deep fundamental analysis. This structure will highlight our discretionary skills in active management, increasing the probability of above average returns and differentiating us from passive or broadly diversified funds.
3. Leverage ETF Structural Advantages for Efficiency and Appeal
ETFs offer benefits like intraday liquidity, tax efficiency, transparency, and lower costs compared to the average mutual fund. This makes them more attractive to both retail and institutional investors. For an active value strategy, this structure provides trading flexibility, allowing Rocklinc to efficiently implement and adjust a concentrated portfolio while appealing to investors seeking these features.
4. Potential for Outperformance in Volatile Markets
Value strategies in concentrated active ETFs can navigate market volatility by focusing on sustainable long-term returns and downside protection. In an environment where active management may outperform passive indexes, especially with a focused approach, Rocklinc can position the fund to capture upside return while managing risk, attracting investors looking for strong performance.
5. Competitive Edge Through Differentiation and Niche Targeting
With many ETFs being passive or diversified, a focused active value ETF stands out as a specialized product, offering a competitive advantage for Rocklinc. We can target niche investors interested in a high-conviction value fund in a crowded market.
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