Exchange traded funds are becoming increasingly popular amongst investors for many different reasons. In general, they relate to the costs of dealing with bank-owned brokerage firms, high fee-based accounts and mutual funds, as well as the increasing sense that most people can’t beat the market so why not just match it. Inukshuk Capital Management trades and invests exclusively in indexed exchange traded funds because they offer excellent liquidity, low costs and broad diversification.
An exchange traded fund trades on the stock market much like an individual stock does. This offers any investor transparency – you can see the published price on the market as well as compare your investment’s performance to a published index, like the S&P/TSX 60 Index. The larger indexed exchange traded funds that Inukshuk Capital Management invests in are very liquid – meaning they are easy to buy or sell without impacting the market price.
The management expense ratio – the cost to manage a fund or a portfolio – of the typical exchange traded fund Inukshuk Capital Management invests in are much lower than any other type of investment vehicle. For example, most exchange traded funds have management expense ratios of much less than 1% a year, with some as low as 0.05% per year. Fees can be a large drag on performance over time so reducing them using exchange traded funds is a good start to better investing.
There are all kinds of different types of exchange traded funds – specific to industries or a commodity or an active strategy. Inukshuk Capital Management trades and invests in only the most liquid exchange traded funds that are benchmarked to an index. That means that the only mandate of the manager of the exchange traded fund is to try and track a published index whose composition is fully transparent. For example, the iShares S&P/TSX 60 Index ETF (XIU.TO) is an exchange traded fund with the investment objective that it: “Seeks long-term capital growth by replicating the performance of the S&P/TSX 60 Index, net of expenses.” With one trade an investor can be invested in some of the 60 largest companies in Canada and is diversified to the extant that the index is.
Inukshuk Capital Management is an independent investment manager focused on cost-effective systematic exchange traded fund investing using strategies designed to maximize risk-adjusted returns. We use a disciplined, quantitative approach to design tailored portfolio management solutions for individuals and institutions. Inukshuk Capital Management is also the manager of the Inukshuk Opportunities Fund LP, a systematic, multi-asset class, long/short global investment fund.
Inukshuk Capital Management Inc. is incorporated under the laws of Canada and is registered as an Investment Fund Manager, Portfolio Manager and Exempt Market Dealer in Ontario. ICM’s office is located in Toronto, Ontario.