Guardian Capital LP has introduced a new actively managed fund that uses AI to select stocks that generate meaningful revenue from or are investing heavily in AI.
Launched July 28, the Guardian i3 AI Technology and Innovation Fund is offered in F, A and ETF series (TSX: GIAI).
The fund uses a combination of AI and human intelligence to invest in companies that potentially stand to benefit from the growing use of AI.
And it’s meant to provide investors with exposure to AI beyond the usual small group of mega-cap stocks and broad AI market indices, said Sri Iyer, managing director and head of i3 Investments with Guardian Capital, in an interview.
“We feel that the right approach to participating in the AI ecosystem is not just by buying the market or what we call the ‘market beta’ or the ‘market index’ for AI,” he said.
“If you’re able to sift through … and actually own companies that are truly leaders and, on a risk-adjusted basis, representing what the AI evolution looks like, we feel that there is a competitive advantage amongst the peer group who are trying to give you the AI exposure.”
The fund is managed by Guardian Capital’s i3 investments team, which has eight years of experience using AI in its investment processes.
As Iyer explained, the fund uses a multi-layered AI-driven process to select 50 AI “enabler” or “adopter” stocks.
In the first “evidence” layer, Guardian Capital uses AI to sift through 10-K and 10-Q filings from companies in its global equity universe to find out whether there are any references to the companies developing or adopting AI.
Next, there’s an “authentication” layer that uses quantitative data and large language models to rank companies based on how central AI is to each business and how much they’re financially benefiting from AI.
Then, AI will cross-validate those findings against companies’ management transcripts to verify that companies’ AI-related claims are consistent with their business results.
Once Guadian Capital is able to “get the good, bad and ugly,” the final step is for the i3 investment team to create a portfolio of 50 companies across various AI themes and industries. This includes AI infrastructure; power generation; cybersecurity; consumer technology; industrial automation and robotics; health care; AI cloud platforms; semiconductors; AI software; and quantum computing.
Some of those holdings include “the usual suspects” in the AI industry such as Nvidia Corp, Micron Technology, Inc., Apple Inc., Alphabet Inc. and Microsoft Corp., Iyer said. Some lesser-known names in the portfolio include Tower Semiconductor Ltd. and Credo Technology Group, “which are not very small by any means, … but obviously not a Google or Apple either,” he added.
Iyer said the combination of active management and AI allows Guardian Capital to be “highly adaptive and nimble” as the AI market evolves, “and it keeps us away from behaviour traps.”
IA Clarington introduces actively managed international equity fund
IA Clarington Investments Inc. has introduced an actively managed international equity fund.
Announced July 27, the iA Clarington International Multifactor Equity Fund is available in both traditional mutual fund series and an ETF series (TSX: IIME).
Managed by iA Global Asset Management Inc. (iAGAM), the fund aims to provide diversified international equity exposure using a quantitative investment process. It uses “dynamic factor allocation that adjusts exposure as market leadership evolves,” a release said.
The fund looks at more than 30 factors including quality, momentum and value themes, the firm noted.
It’s managed by Matthew Kurbat, iAGAM vice-president, portfolio manager, head of quantitative research, and Sébastien Vaillancourt, senior director, portfolio manager, quantitative equities. The two have more than 50 years of combined experience.
The fund’s ETF series has a 0.5% management fee. It began trading on the TSX on July 27.
BMO expands its fund lineup
BMO Investments Inc. is expanding its mutual fund lineup by giving advisors and investors new ways to access existing investment strategies, particularly those initially offered through the ETF structure, it announced on July 27.
A full breakdown of the new mutual funds, along with their corresponding purchase options, is available here.
Separately, on July 30, BMO Asset Management Inc. (BMOAM Inc.) announced the launch of a new ETF that’s designed to give investors a way to hedge against or bet on stress in the U.S. high-yield bond market.
The BMO Credit Stress Opportunities ETF is available in Canadian-dollar units (TSX: ZCDX) and U.S.-dollar units (TSX: ZCDX.U).
The fund “seeks to provide exposure to changes in the credit conditions associated with a broad, diversified portfolio of U.S. high yield corporate issuers, while minimizing the effects of interest rate fluctuations” by taking a short position on credit default index derivatives (CDX), a release said.
The CDX and other derivatives used by the fund will reference the Markit CDX North America High Yield Index or the individual issuers referenced in this index, it noted.
“By taking a short position on CDX, the BMO ETF will pay a premium to enter into the CDX and will receive default payments under the CDX when there is a credit event. The BMO ETF may also use other derivatives such as swaps (including credit default swaps), options or other derivatives to meet its investment objectives,” the release added.
The fund is designed to benefit when U.S. high-yield credit spreads widen. Conversely, it can lose value when credit spreads decrease, or credit conditions improve.
ZCDX is meant to be a tactical investment, rather than a buy-and-hold investment, BMOAM Inc. cautioned. It’s not suitable for investors who don’t understand the investment objective, investment strategies or the risks associated with the fund.
CI GAM makes risk rating changes
CI Global Asset Management (CI GAM) has made risk rating changes for two mutual funds, the firm announced on July 28.
Namely, the risk ratings for the Invesco Global Balanced Class and Invesco Global Balanced Fund have been upgraded to medium from low to medium.
The change applies to all series of the funds, except for series H, which is currently rated medium and remains unchanged, CI GAM noted in a release.
Dynamic announces fee reductions
Dynamic says it’s cutting the management fees of eight of its actively managed ETFs to ensure the products remain competitive and meet the evolving needs of clients, the firm announced Thursday.
The fee reductions, which range from 10–30 basis points, will apply to four fixed-income and four equity ETFs. They’re slated to take effect around Aug. 1.
The changes are detailed below:
- Dynamic Active Tactical Bond ETF (TSX: DXB) will have its management fee reduced to 0.3% from 0.5%
- Dynamic Active Canadian Bond ETF (TSX: DXBC) will have its management fee reduced to 0.3% from 0.4%
- Dynamic Active U.S. Investment Grade Corporate Bond ETF (TSX: DXBU) will have its management fee reduced to 0.35% from 0.45%
- Dynamic Active Crossover Bond ETF (TSX: DXO) will have its management fee reduced to 0.4% from 0.5%
- Dynamic Active International ETF (TSX: DXIF) will have its management fee reduced to 0.57% from 0.75%
- Dynamic Active Global Financial Services ETF (TSX: DXF) and Dynamic Active U.S. Mid-Cap ETF (TSX: DXZ) will have their management fees reduced to 0.5% from 0.75%
- Dynamic Active Emerging Markets ETF (TSX: DXEM) will have its management fee reduced to 0.5% from 0.8%
Toronto-based Dynamic is a wholly owned subsidiary of Scotiabank.
Leith Wheeler reopens its F-series funds to new investment
Leith Wheeler Investment Counsel Ltd. says it’s reopened the F-series of its mutual funds to new investment.
The Vancouver-based firm previously announced on July 17 that it was temporarily not accepting buy orders for F-series of the funds as it worked “to resolve an issue related to the distribution of Fund Facts and prospectus documents to clients.”
Leith Wheeler didn’t immediately respond to a request for comment.
