Evolve ETF provides diversified exposure to innovative industries

Rudy Luukko 2 May, 2018 | 5:00PM
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Evolve Innovation Index (symbol: EDGE), an exchange-traded fund providing exposure to companies "involved in innovative and disruptive trends" in a range of industries, opened for trading today on the Toronto Stock Exchange. Sponsored by Toronto-based Evolve Funds Group Inc., the ETF seeks to replicate the returns, before fees and expenses, of the Solactive Global Innovation Index.

The index, which will be rebalanced quarterly, measures the performance of equity securities that have been classified according to six categories, namely: robotics and automation, future cars, cyber security, big data and cloud computing, genomics, and social media. Each of these categories are to be equally weighted. The index creator, Solactive AG, is based in Frankfurt, Germany.

In terms of geographic exposure, the index will consist of issuers located in developed markets, as well as Taiwan and South Korea. The ETF's foreign-currency exposure will be hedged or substantially hedged back to the Canadian dollar.

In four of the six industry categories, the ETF's securities-selection strategy will be to hold 10 equally weighted stocks, or fewer than 10 if not enough stocks meet Solactive's market capitalization and other criteria.

The constituents in the remaining two categories will be based on the Solactive Future Cars Index Canadian Dollar Hedged and Solactive Global Cyber Security Index Canadian Dollar Hedged, respectively. This exposure will be achieved by holding units of Evolve Automobile Innnovation Index (CARS) and Evolve Cyber Security Index (CYBR). There will be no duplication of fees.

The management fee for the new ETF is 0.40%. In addition, Evolve charges an administration fee of 0.15% that covers most expenses.

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About Author

Rudy Luukko

Rudy Luukko  Rudy Luukko is a freelance writer who contributes to Morningstar.ca on topics involving fund industry trends and regulatory issues. He retired in May 2018 from his position as editor, investment and personal finance, at Morningstar Canada, where he had worked since 2004. He has also worked as an editor and writer for various general, specialty and institutional media, and he has co-authored courses for the Canadian Securities Institute. Follow Rudy on Twitter: @RudyLuukko.

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