Weekly market wrap Feb. 2, 2018: Markets sell off as rate-hike fears prevail
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By Fund Library News Wire  | Friday, February 02, 2018


By Mike Keerma

* Markets sell off as rate-hike fears prevail.
* Evolve launches blockchain ETF.
* Harvest gets on board the blockchain train with new ETF.
* Vanguard debuts three asset allocation ETFs.
* Franklin Templeton lists three new ETFs.
* Invesco’s CAD-hedged global small/mid-cap ETF commences trading.
* RBC launches US$ and currency-neutral mutual funds.

* Markets sell off as rate-hike fears prevail. The major North American stock market indices staged a unified retreat last week, as a positive U.S. jobs report raised fears that the U.S. Federal Reserve, under its new Chairman, Jerome Powell, would start raising short-term interest rates sooner rather than later. The yield on the benchmark 10-year U.S. Treasury notes rose through the week, getting as high as 2.84% on Friday in anticipation of just such a Fed move. The near-dormant CBOE Volatility Index (VIX) sprang to life, climbing to a high of 17.86 on Friday, its highest level in over a year, and signaling a possible return of stock market volatility. The broad selloff last week resulted in a weekly loss of 3.9% for Toronto’s S&P/TSX Composite Index. And New York’s blue-chip S&P 500 Composite Index dropped 3.9% on the week, its steepest weekly drop since late 2016. The tech-weighted Nasdaq Composite Index also lost 3.5% on the week, while the Dow Jones Industrial Average fell below the 26,000 mark in its worst single-session decline since Black Monday, posting a loss of 4.1% on the week. Key commodities weren’t immune either, as gold fell 1.4% on the week and crude oil dropped 1.8%.


* Evolve launches blockchain ETF. Evolve Funds Group Inc. has filed a preliminary prospectus for an actively managed exchange-traded fund (ETF) that it says focuses on blockchain technologies. The actively-managed Evolve Blockchain ETF (TSX: LINK) is expected to invest in shares of companies that are involved in the development and utilization of blockchain and other distributed ledger technologies.

* Harvest gets on board the blockchain train with new ETF. Harvest Portfolios Group Inc. announced it has also filed a prospectus for its Blockchain Technologies ETF (TSX: HBLK), which aims to track the Harvest Blockchain Technologies Index. The fund invests in equity securities of companies involved in the development and implementation of blockchain and distributed ledger technologies.

* Vanguard debuts three asset allocation ETFs. Vanguard Investments Canada Inc. announced it is launching three new asset allocation ETF portfolios that provide greater access to its leading globally diversified strategies. “Investors and advisors are increasingly looking for simple yet sophisticated single-ticket investment solutions that provide well-diversified global equity and bond exposure within a low-cost ETF structure,” said Atul Tiwari, managing director for Vanguard Investments Canada Inc. He added that these ETFs offer a choice of three different risk profiles, regular rebalancing and low cost.

Vanguard Conservative ETF Portfolio (TSX: VCNS) aims for a combination of income and moderate long-term capital growth with a strategic portfolio allocation of 40% equities and 60% fixed income.

Vanguard Balanced ETF Portfolio (TSX: VBAL) looks for long-term capital growth with a moderate level of income with a portfolio weighted 60% to equities and 40% to fixed income.

Vanguard Growth ETF Portfolio (TSX: VGRO) targets long-term capital growth with an allocation of 80% to equities and 20% to fixed income.

* Franklin Templeton lists three new ETFs. Franklin Templeton Investments Canada announced that its three new ETFs have commenced trading on the TSX.

Franklin LibertyQT Global Dividend Index ETF (TSX: FLGD) aims to track the LibertyQ Global Dividend Index. According to a Franklin Templeton release, the ETF uses a two-step process to narrow down the dividend-paying universe, and invests in companies with favourable quality attributes that are looking to sustain or grow their dividend. Industry and sector allocations are driven by the MSCI ACWI ex-REITS Index. To ensure diversification and mitigate volatility, each security held in the ETF is capped at 2%.

Franklin LibertyQT Emerging Markets Index ETF (TSX: FLEM) looks to track the LibertyQ Emerging Markets Index. It uses a multi-factor approach focusing on high-quality emerging market equities with reduced volatility. The ETF targets a lower level of risk than the MSCI Emerging Markets Index.

Franklin Liberty Core Balanced ETF (TSX: FLBA) invests directly in North American stocks and bonds. The fund uses a a proprietary rules-based model built on historical and projected financial stock market data to identify companies exhibiting attractive levels of quality, value, low volatility and momentum. The fixed income sleeve consists of a range of debt securities, including fixed income and floating rate securities, government and corporate bonds, and bonds backed by mortgages and other securities.

* Invesco’s CAD-hedged global small/mid-cap ETF commences trading. Invesco Canada announced that its Canadian-dollar hedged PowerShares FTSE RAFI Global Small-Mid Fundamental ETF (TSX: PZW.F) has started trading on the TSX. Invesco says the new series allows investors to choose the currency exposure that best suits their unique investment goals: CAD-unhedged (PZW), USD-unhedged (PZW.U), and CAD-hedged (PZW.F). The ETF invests primarily in shares of small- and medium-sized companies from developed markets globally.

* RBC launches US$ and currency-neutral mutual funds. RBC Global Asset Management Inc. announced that it has launched six new U.S. dollar fixed-income and currency-neutral mutual funds:

RBC $U.S. Strategic Income Bond Fund
RBC $U.S. Short-Term Corporate Bond Fund
RBC Global Equity Focus Currency Neutral Fund
RBC QUBE Low Volatility Global Equity Currency Neutral Fund
RBC Global Bond & Currency Fund
RBC O'Shaughnessy U.S. Value Fund (Unhedged)

Check Fund Library’s Market Activity page regularly for active updates on key market indexes and commodities.

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The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.

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