Paired with the launch of AGFiQ Dynamic Hedged US Equity ETF (USHG), AGFiQ also debuted the AGFiQ Global Infrastructure ETF (GLIF) at the same time on NYSE Arca in May.
The AGFiQ Global Infrastructure ETF uses a multi-factor investment process to seek long-term capital appreciation by investing primarily in global equity securities in the infrastructure industry.
With a net expense ratio of 0.45%, the fund’s allure lies in the fact it provides potential diversification and risk reduction benefits by targeting infrastructure, a sector that has traditionally exhibited lower correlations with traditional assets classes and lower volatility than global equities. According to the fund’s fact sheet, another key reason to invest is that the infrastructure securities that are included may continue to offer higher dividend yields than equities or bonds.
The fund has been listed on the Toronto Stock Exchange (TSX) for approximately 18 months and garnered a fair amount of interest, propelling AGF to bring it to the US and list it on the NYSE.
The whole idea behind the fund, according to Bill DeRoche, Chief Investment Officer & Portfolio Manager at AGF Investments LLC, is to provide exposure to publicly listed infrastructure assets. These assets include power generation, road, telecommunication, water, rail, airport, and port infrastructure.
“These are real assets so they tend to be a good hedge against inflation,” says DeRoche. “A lot of the time they are government sponsored so there is lower volatility. They also tend to have a fairly significant yield component associated with them.”
The fund uses a proprietary, multi-factor quantitative model to evaluate securities of issuers in the infrastructure group of industries by evaluating and ranking equity securities based on factors that identify growth, value, quality and risk characteristics, according to the fund’s prospectus.
“There’s two things we’ve seen investors doing recently,” said DeRoche. “One is reducing their equity allocation based on more modest return expectations. The other thing that we’ve seen is they’ve been looking at less risky equities.”
This fund aligns with those trends. “Investors can get diversification and at the same time lower the risk of their equity portfolio by making an allocation to this infrastructure fund,” said DeRoche.
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