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[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
coming up on today show, Andres Rincon from TD Securities will be our guests discussing the trends he is seeing in the exchange traded fund space.
MoneyTalk's Anthony Okolie is going to give us a preview of what to expect from tomorrow's US inflation report.
And in today's WebBroker education segment, Hiren Amin is going to show us the technical analysis tools available on the WebBroker platform.
Here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before you get our guest of the day, let's gave an update on the markets. We'll start here at home with the TSX Composite Index.
See what's happening there. We've got some money moving into the price of crude, supporting some of the energy stocks. We are just a bit above breakeven right now.
Will be generous, it points to the upside or just for takes, among the most actively traded names on the TSX with West Texas intermediate at almost 84 bucks per barrel are some of the energy it plays including Baytex, nothing too dramatic, up about 2.7% on that name.
Nuvei, an interesting name today, down about 37 1/2%. South of the border, the S&P 500, let's see what mood investors are in. As Anthony is going to live for us later in the show, we are going to get another inflation print out of the United States. What are the expectations? What could it mean for Fed policy? There's a lot going on there.
At 4462, we are down about 37 points right now or almost a full percent. The tech heavy NASDAQ, let's see where some of the pain points might be. A little more to the downside.
Definitely some tech selling today.
You're down about 1.2%. And Roblox, I never learned how to say this correctly, earnings miss. The stock is down 20%. You might say, what did these guys do?
I have to remind myself all the time as well.
They generate sales from a virtual currency called Roblox which kids used to buy in game features. The kind of in game features I always said no to for my kids.
And not to market update.
Equities have had a decent run so far this year, but is that performance leading investors to put more money toward stocks?
Here to discuss what he is seeing an ETF space is Andres Rincon, head of ETF sales and strategy at TD Securities. Great to have you back.
>> Thank you for having me.
>> There has been a lot of talk over the summer about Wall Street putting their toes back into stocks after the run that they've had. What's actually happening in terms of funds in ETF?
>> We are seeing the market have quite a bit of a rally and it's been inching up over the last couple of months. A lot of analysts now are reporting that they are seeing, inflation slow down. It maybe it's time to… However, on the flipside, we haven't seen that yet. If you look in the ETF space here in Canada, for example, call it $13 billion that's gone into fixed income ETF's.
Compare that to $7 billion in equity ETFs.
You might say well, that's the last few months. Talking about full-year numbers.
But that Is actually widening this year.
So right now we are at five, $6 billion and we are continuing to see that widening gap between flows in fixed income and equities.
Just in July, we saw $1.8 billion go into fixed income ETFs. So that's a staggering number in terms of how much money is going in there and I do think it's a shift in momentum in the direct investing space and also in the advisor space and that they see the yields even get in fixed income and that's why it's so attractive right now and a lot of money is going into that space.
>> So as funds flow in that direction, what kind of ETF products, we are talking fixed income, we are starting to break it down across several different kinds of products, was actually seeing the most interest from investors?
>> It's quite broad but there are two areas that have seen a lot of flows.
Number one is cash management ETFs or you can also call them high interest savings ETF. Basically, these are just bank deposits offered through a fun company and these are very popular.
The only pay about 5% and we are seeing a lot of flow there, called to the tune of $4.
8 billion this year alone.
A lot of money is going into these ETFs in these ETFs are relatively low risk and that they hold just in deposit with some of the banks. On the other side of that, you have money market ETFs, these are all true short-term products and these products have also been very popular.
These are T-bills, a variety of money market securities that are in these funds and they offer high yields in this environment and so they are obviously very attractive to a lot of investors.
And apart from those two, you get your traditional fixed income investment, aggregate bonds, alternative credit, a couple of different areas.
> When it comes to a high interest savings accounts or money market funds, what do investors need to keep in mind?
Yield is attracting people into the space but what do they need to be mindful of?
Yield isn't a guarantee forever.
> Right. If inflation starts going lower, then obviously rates will lower and these products will pay lower.
>> Let's talk about some of the parts of the market. These are interesting once he put before us that I'm not very familiar with.
Buffer and accelerator ETFs?
What are these?
>> Yes, they have become very popular in the US and slowly more in Canada. In the US you have a company called innovators ETFs which are the leaders in the space.
In Canada, you had first trust launch a couple of these and I'll be Mo has filed to launch more . His is a space that is quickly growing. Especially it is very popular with retirement community. And the reason they are poplars because they offered defined out come exposure.
unlike many of your traditional funds that go up and down in the market, they use options to construct portfolios that they have thisfixed outcome.
They have a variety of different outcomes offered to clients.
Some have limited protection, some of them have full protection, some of them have accelerated leverage. They call it accelerators or they have buffers.
And they can play around with the buffers in the leverage and what that ultimately gives you is exposure to the market but with a different outcome. So you might have, let's say, a 10% buffer on the downside what you might be 15% or higher.
If you will this product for two years, let's say, you might have a certain upsidewith a limited downside, let's say.
Or he might have full downside protection with limited upside participation.
And the accelerator case, you might have more leverage but one-to-one downside. So they have many different ways to give you exposure to give the investor's exposure and they become a lot more popular with those investors that are close to retirement and are worried about their downside protection.
>> When I hear leverage, I think about a certain amount of caveats that come with that.
What do people need to be aware of? They are looking at these products and see that they are leverage product.
>> With leverage, you have leverage to the upside and the downside sometimes.
Most of these have downside leverage that's one-to-one.
But at the end of the day, you have leverage exposure in many of these products and especially on the accelerator side. On the buffer side, was important to remember, not to get into the weeds, is these are usually popular and bought at the time that they are launched and not one or two months later because they do move in value as the markets move.
so if the markets move and the market is up 10%, that buffer is 10% lower.
So you do have downside in the scenarios.
So there complicated products, not easy to understand, but they become very popular with investors.
>> A very interesting space if people want to take a deeper look. I want to remind viewers that Andres has a show called Buyside Views where he speaks with fund industry executives about the trends they are seeing. The latest episode came out yesterday.
It features East Coast fund management to Mike MacBain and one of the topics he spoke about is why investors might not be as diversified as they think.
Have a listen.
>> What happens there is that I don't have any interest rate exposure. So I'm not correlatedto interest and that creates a separate risk profile for me because almost every other asset that is invested today, because of the intervention from central banks, almost every other asset is correlated to interest rates. So you think you gotta diversified 6040 portfolio of equities and bonds but really, you don't.
You've got a highly… That showed in spades in 2022.
>> Interesting commentary there from Mike about this idea of the 6040 portfolio and perhaps are not as diversified as you think.
Tell me a bit more about the show.
Mike show her some of the other shows.
>> TDs Buyside Views, we host a lot of our clients in the show where they can actually bring their perspectives and what's happening in their world and their markets and we were grateful to have Mike MacBainand he had the chance to talk a little bit about alternative fixed income, how it fits in Europe are fuller, some of the risks, some of the benefits of that space. So I do encourage, obviously, the listeners to join usat TD Securities.com, saponify, Google podcast, and you can find us on Buyside Views at TD Securities.
>> Interesting stuff and a lot more to come on the program.
We are going to get your questions about exchange traded funds for Andres Rincon in just a moment time.
And a reminder that you can get in touch with us any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on some of the top stories in the world of business and take a look at how the markets are trading.
We've got shares of Canadian grocer Metro in the spotlight today. The company is reporting a 14% jump in adjusted profit, that's on stronger-than-expected sales growth. While margins continued to feel the pressure of higher costs, Metro is saying it's seeing some moderation in food inflation.
We see the stock right now up modestly.
This earnings beat comes amid a strike of some 3700 Metro employees in the greater Toronto area.
That ride hailing company Lyft is sticking to its competitive pricing strategy.
This in an attempt to WIN riders away from their larger rival, Uber.
And while Lyft did manage to grow the number of active riders this quarter, the market perhaps has some concerns about the strategy.
The stock is down a little more than a percent.
Lyft appears to be doubling down on that competitive pricing approach, some observers are questioning the company's path the profit ability in light of that.
I want to check in on shares of flight simulator company is CAE, among the top performers on the TSX Composite today.
They are up almost 7%. The company handed in stronger than expected revenue and profit for its most recent quarter. And the flight simulator companies civil and defence business units posted sales growth in the low double digits.
let's do a quick check on the marketsnow.
We'll start your home on Bay Street.
Up modestly, seven takes periods of the border, day head of the next inflation print out of the United States, we have been sliding. We are down about 32 points right now in the S&P 500, a little less than 3 quarters of percent, just a little bit higher than when we started the program a couple of moments ago.
We are back with Andres Rincon, taking your questions about exchange traded funds. What range can one expect for ETF fees?what's considered reasonable in the space?
>> it can vary quite a bit but most importantly, it's a much lower range than in other investment spaces like mutual funds, for example.
so the average fee in the ETF world is about 40 beeps, so just lower than half a percent, let's say.
And if you look at the mutual fund space, that could be 2% on average. So I think on average, the mutual fund industry in Canada is over 2%. And that's just the management fee, let alone the management expense ratio of these funds which can at times be 3%, 4%.
So the ETF itself does a very good job of externalizing a lot of the costs.
That's why the whole industry has moved towards ETFs and because of that, the fee for a lot of the fund manager or cost for the fund managers is lower and as a result, the fees are lower.
What's really interesting is that generally speaking, the view has been that ETF's are cheaper because they are passive and mutual funds are more extensive because of the active, but that's not really the case.
We have a lot of actively managed ETFs in Canada. Call it 1/4 of the market in Canada is actively managed. And the average fee and that space is closer to 59or 60 or so.
For in next, it's 39.
It's very, very low fees across a gamut of strategies and the same goes for equity, fixed income and covered call in many different areas. So can vary, obviously, from seven beeps on the, you can get an ETF on the index base for that cheap, to say percent, but in reality, it's closer to that 50 beef range and that's obviously a far more economical way to get exposure for your portfolio in general.
> An investor is doing their homework in the HF space and they hear you say 40 beeps on average, and you see a ratio little bit higher than that, is this a question they should should ask themselves?
What's the strategy, our hands being put on this, what are you paying for?
>> You said it rightly, how often somebody put their hands on it. How systematic is the strategy versus how actively manages and strategy.
If you go the pure passive space, it can be much easier to manage these portfolios, so it requires fewer hands on these portfolios so it's cheaper, generally speaking, but then you have a cover call ETF which takes quite a bit of work from these PMs to buy the securities, manages portfolios, at the same time, roll those options, so naturally they will be more expensive. On the other side of the spectrum, from the expensive side, you will find alternative ETFs, long short strategies, these are fairly complex strategies and you can find that in mutual fund form and ETF form but they are a little bit more expensive and ETFs form because they are a lot more complex and require much more interaction from PMs.
> And a breakdown on the spacer. Another viewer has been reading about ETFs that say they have light leverage, for example 1.25 times.
Is that still too risky?
And are these better for short-term trades or long-term hold? A light leverage ETF, what is it?
>> These are relatively new to the Canadian market. We call them boosted ETFs.
they have 1/4 turn of leverage to a degree, some of them have a little bit more, but for the most part. These were really started by Hamilton ETFs and then Harvest did some in a couple of other issuers. And they are really interesting in that theyprovide more yield in the ETFs.
They boost the yield. If you look at ETFs, the focus is on more yield, not more exposure or more leverage.
that's why it's only a little bit of leverage. And what's interesting with traditional leveraged funds, similar to these, is there are daily resets in terms of their lives.
from a long-term perspective, you have to be careful, as you do with two times or three times leverage. Now these are only 1.25.
somebody's actually sell calls on them which upsets a lot of volatility to the fund.
They are a little better position as a long-term hold and their goal is the extra yield in these funds.
It's mostly banks and utilities. These portfolios are in themselves very low volatility portfolio.
They are constructed with those names in mind so they don't really impact the long-term performance of the portfolio.
>> You're talking at the time that you would hold any of these investment vehicles. Is that an important thing?
Perhaps some people get into ETFs and want a little more leverage but they are not understanding that this is a buy-and-hold strategy, these are meant for short-term trades?
>> That's a very good question. These are path -dependent funds and they have daily leverage, stay offer you daily two times or three times, not long-term returns.
They are not meant to be held as long-term investment. They are meant to be held as trading vehicles.
>> Interesting stuff.
Another question now.
This one about the industrial space.
Viewer wants to know, are there any Canadian listed industrial ETFs?
>> There are many.
Industrials is a very common area for a lot of the ETFs managers in Canada.
A lot ETFs have exposure to waste management, airlines, and various areas in the industrial space.
I'm not going to memorize all the names of the ETFs, there's over 1300 ETFs in Canada,but Z IN from BMOis one, XGIFHG.
You have a variety of ETF to look at the specific area here in Canada or globally.
As you said industrials is a pretty broad basket. You want to talk about rail, airlines, garbage.
>> Exactly.
Names like that will show up in these baskets. It could be North America centric, it could be global centric.
Generally speaking, they are not purely Canadian centric.
> Interesting stuff. Let's take another question here about Japan.
Warren Buffet recently invested more in Japan.
Can you discuss any ETF that cover Japan?
What's going on with Japan coming up more recently in discussion?
>> not quite sure why we are seeing more interest in Japan.
it might be interest into developed, non-developed, more of that story. As Asian countries are in the developing stage and it's become a bit of a tougher environment, you see more interest in Japan and that's what we see, it's very steady.
The story is well known for Japan.
That's what we see often, a move towards Japan at some points in time. In terms of ETFs, there are ETFs in Canada and the US the focus on Japan. One of the bigger ones in Canada is JPM and also JPN, these are from PMO. these are simple products, market cap weighted ETFs that cover the Japanese market.
And local securities.
>> Gives the viewers a place to start the research. Make sure you do your own research before you make investment decisions. Will he be back to your questions for Andres Rincon on ETFs in a moment.
And a reminder that you get in touch with us at any time.
Just email moneytalklive@td.com.
Now, let's get our educational segment of the day.
Technical analysis is one strategy you may consider when sizing up a potential investment. Hiren Amin, Senior client education instructor at TD Direct Investing and trends is now with a look at how you can find those tools on WebBroker.
Great to see you again.
let's talk about investors wanting to learn more about technical analysis. Were they go here?
>> All right. Great to be back again.
Technical analysis is such a vast field for a lot of traders to analyse their stocks.
One of the central tenets behind technical analysis is really to look at trends and gauge trends on underlying securities.
We want to see uptrends, downtrends, sideways trends, and momentum.
There some importance in understanding trends in this field of research but for many people out there, they don't know where to get started or where to begin.
You could just go out and buy a big lumpy textbook and then try and see if you can decipher it, but you might be more lost than you are found. But that's where WebBroker has you covered.
We have the tools to make technical analysis a little less technical. I'm going to show you that in a moment.
Let's jump into WebBroker over here.
Now it's in here, I want to take us to the technicals page. You can start by clicking the research tab and under the markets column, go to the very last tab that says technicals.
Now within this page… We have basically this is the formal paid for technical analysis to get started and there's a lot of handholding there stunned over here.
You are not going to be lost.
You have a wealth of information to help you decipher all this information.
on this landing page, what your first seeing is a breakdown of some technical events that are occurring right now in the market. You will first notice that any recently viewed stocks that you are interested in will show up at the top of the carousel. Then you have the most bullish views that are a gauge of the last week, smart technical indicators, most popular section, and these are the most researched stocks in the last week for a lot of investors. Then you have some that are trending now with a comparison between the previous 90 days to the current week, and then there's bearish events.
Within each of these, there is an informational box. You can hover over it to tell you exactly what it is. But the thing I really want to point everyone to is how do you get learning about technicals? How do you make sense of all this? If you look to the top right, we have a graduation cap and there's actually an educational section within here and a lot of the stuff that you see on this page or within the research pages going to be explained here. See him go to classical patterns.
It'll tell you a lot about those chart patterns that we look at.
If you want to look at short-term things, you can look at some of the candlesticks and what they form and indicators, sorry, I should go to oscillators.
That's where a lot of these studies inform us about the use technical events. It's a great tool to get started with. The last thing I want to point out was a featured ideas page as well.
You can come within here and the software will give you some of the best featured ideas for the week broken down over here both by bullish, the ones that show up in green, and bearish, for the week over here.
From here, you can create your own list.
You can see the drop down. These are the ones that are presented to you but if you have any stocks that you are watching, this can also be presented right there as well Greg.
>> Okay. Lots of good information there.
What if you want to be notified of a specific security changes their trend?
>> Absolutely.
So what you can do, there are a couple of things you can do. If you are monitoring a number of different stocks, you have the ability to create a watchlist.
I'm going to go back onto the technical insight page, the homepage, and within the menu I go to my watchlist. I've already got a watchlist started. I called it automakers. There are number one so no one to track it.
We're just going to add one in here. We will call it and I oh, one of the new electric manufacturers of vehicles. You can throw your specific companies in here and then if there's one you want to specifically monitor, let's say I want to monitor Anaelle, I click on it and it will bring me all the technical events that's taking place on the stock, broken down by different time frames, but the alert function is this alert bell over here.
You can click on this and then choose what type of technical event you want to be alerted to, and most commonly, we can do something like an indicator, you can click the drop-down and choose what type specifically or you can base it off of a price alert as well. So you can set these alerts up and let's say we want to set an alert up if it goes past nine dollars, I'm just being one on price, and then set alert and then go to alert centre and we can manage the alerts and see what's happening with them over here.
This is a way to keep tabs on any technical events on any stocks you are keeping an eye on.
>> Great stuff as always. Thanks for that.
> My pleasure.
>> Hiren Amin, senior client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Now before you back to your questions about ETFs for Andres Rincon, a reminder of how you can get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.
com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Okay, we're back with Andres Rincon, taking your questions about ETFs.
A couple of these came in the last couple of moments. Which ETFs offer concentrated exposure to AI related stocks? The big one this year, artificial intelligence.
>>in the US, there are a couple.
In Canada, there are none that have that name in the label. In the US, a very popular one is BOT Z. It's been there for a long time.
It is offered by global acts and it's one of the more popular ones that offers exposure really to the chips which is where AI is growing. So any fund that has exposure to the chip industry is really now being re-labelled AI because obviously it's a very popular area to invest in now.
In Canada, you have a group of funds that while they are not directly in the name also are very heavily exposed to the AI space. So one example is edge from Evolve ETFs which gives you exposure to a lot of the chip manufacturers and a couple of different areas that are exposed to AI.so one of the issuers here, horizons ETFs, it is the same parent company as global acts and they have a very similar fund here but they haven't labelled it.
but in reality, it's very similar to BOT Z in the US. They have equally or similarly an innovation fund here. Many managers have innovation funds that are investing in AI but BOT Z is top of mind in the US.
>> Interesting space for viewers to do their homework on how they feel about artificial intelligence going forward.
Earlier we were talking about cash management or high interest savings ETFs.
Someone wants to know if they are eligible through the CDIC?
>> The short answer is no, they are not CDIC eligible. If that matters to you, thenBank HIFCAs would be the right place for investing.
> Because some of these vehicles are actually mutual funds, right? And mutual fund can go up and down in value.
I think what some of these money management funds, it's not expected to but it's not impossible for them to.
>> They are really not supposed to at all given that is just a bank deposit. All they do is a cumulative interest in paid out.
There really is no movement to the downside.
But because it's under a fun structure, it's not under the same regulations as a bank HIFCAs.
>> Interesting stuff and distinction there. We talked about Japan earlier.
Someone says that to them at least that this would be the right time to get into China. Is there a China or Asian ETF that you could recommend?
We can't give specific buy or sell recommendations on the show were strategies but let's talk about China.
>> China is very interesting because it's hard to get into from an investor's point of view. So for China, you can invest in mainland securities, you can invest in Hong Kong securities or you can invest in mainland securities that are denominated in other currencies.
In order, you have the a shares, the H shares and the B shares. What investors need to understand is that what you want exposure to?
If you want exposure to real China, you need a shares exposure.
If you want exposure to Hong Kong has to offer, then it's a share.
In order for you to invest in a shares, you need to be invested through a local affiliate or bank.
It's more complicated to do so. In the US, there are several ETFs to do that. In Canada, you have a couple of ETF to give you that exposure.
gives you exposure to a shares if that's what you want specific leave. If you want more broadly China, a shares and other areas, the biggest ones are XC age and Z CH issued from BMO and actors that give you exposure to a broad China but not necessarily a shares.
People need to do their homework on that end.
>>good places for people to start their search. Someone says they are looking for global ETF without Canada or the US. Any suggestions? A global player where you're taking the north American countries.
>> What we call global ex-US and Canada is global international.
There is a slew of ETFs in that space.
There are many, many international ETFs on the passive side, active side and fixed incomes IT.there is a variety of ETF's.
But for simple city, a couple of the biggest ETF here in Canada are in the space.
If you look at Z EA or XES, they are both from DMO and from iShares, those ETFs are fairly sizable passive the ETSthat don't touch North America.
>> We were talking about artificial intelligence earlier. Electric vehicles haven't gone anywhere. What ETFs give you the best exposure to the EV space?
>> Once again, it's back to the chip space.
These ETF's, generally speaking, give you exposure to the entire supply chain.
I see why the interest is there.
People might think that electric cars are a couple years out, all the new cars will probably get there, and if they do, you will need exposure to the supply chain and that's the manufacturers of the cars, the components of the cars, the batteries, for example.
So in Canada, you have cars, one of the few and first automotive focus ETFs in the world. That's also from evolve ETFs.
As you can see, although somatic ETFs come from the evolves and the horizons and many of these issuers. But cars get you exposure to many of these different areas.
From iShares, you have asked DRV which gives you exposure to a smaller subset of securities.
>> Of course, when it comes to trying to figure out whether you are an EV person or an AI person, you got to do that research.
We will get back to your questions for Andres Rincon on ETFs in just a moment time.
Make sure you do your own research before making any investment decisions. Do you have a question about investing or what's driving the markets? Our guests are eager to hear what's on your mind, so send us your questions. There are two ways you can get in touch with us. You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send. We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Inflation hasn't been far from our minds this year as investors. Of course, the last time he got an inflation print out of the US it was for June, the 12th straight month, it was lower than March 2021 but we are going to get some fresh data out tomorrow morning.
Is that slowing trend expected to continue? Our Anthony Okolie has been digging into a TD Securities report. What do they say?
>> TD Securities is looking for headline inflation in July to come in at 0.2% month over month.
The big drivers of headline inflation will likely be higher gas prices due to a late surge in July after 6% jump in July.
No TD Securities also believes that Americans paid more for things like groceries in June. TD expects the prices to show a stronger .
3% month over month jump.
Of course, food prices, grocery store prices and eating out were all costlier in June and the United States.
In terms of core inflation, this is something that the Fed will focus on closely.
TD Securities expects core inflation to remain largely unchanged.
this is likely due to core goods prices shifting more to deflation.
Looking ahead, they expect core inflation to keep losing momentum after July, reflecting software goods prices as well as services driven by housing. Meanwhile, rent and rent a primary residence are expecting to show a modest increase in July.
TD Securities expects shelter inflation peaked on a year-over-year basis in Q2 of this year.
Meanwhile, TD Securities is also forecasting a drop in used vehicle prices in July and those prices will continue to fall through September. TD Securities expects to see a pickup in vehicle production which will improve the supply demand imbalance that we have seen in the auto market most of this year. Finally, on wage growth, this is something that the Fed will be watching very closely. Data is pointing to further normalization after hourly earnings peaks a year ago. However, TD Securities says that the process is likely to be prolonged and they expect wage growth is slow to about 3 1/2% on a year-over-year basis.
>> A lot of things going on in there.
But if this is TD Securities take on all this, what do they think it means for the next Fed rate decision?
>> TD Securities expects the Fed to skip a rate increase in September with July's rate hike likely the last in the Fed's tightening cycle. If we get a weaker print, that may add to the inflation deceleration seen in most recent PC report in June, which will create a case for the Fed to pause. Still, TD Securities says the Fed will be looking at the totality of the data and we have a few prints to go before they see enough proof of slowing of inflation to warrant a pause. Currently, the markets are pricing, continue to price and less cuts with 24 basis points less cuts today than at the July Fed meeting.
>> We are going to find out tomorrow morning with that print tells us. Thanks, Anthony. Big day indeed. MoneyTalk's Anthony Okolie.
Let's get you an update on the markets.
We are having a look at TD's advanced dashboard. This is the platform designed for active traders available through TD Direct Investing.
This the heat map function we have upon the screen. He gives you a view of the market movers.
We are taking a look at the TSX 60, screening by price and volume. Let's see what we have on the screen. We have a firming and crude prices not only today but we've sort of been on a move upward for the past month for the most part.
See you can see a lot of green on the screen. Nothing is to outsize. You've got Enbridge, CNQ, Suncor, basically on that side of the screen, you can see names in positive territory.
The brightest piece of green on the screen, at least on my side, is CAE, the flight simulator company. We told you earlier it was moving higher on its latest earnings report.
Where can I find some weakness here?
QSR, Restaurant Brands International, the stock is down modestly, 1.6% today, a day after reporting its latest earnings. Of course, you can do a lot with the heat map. It's not just the TSX 60. There are a number of ways to screen through.
Let's go to the SNP 100 on the screen.
Energy company south of the border benefiting from the firming price of crude, including XOM, Exxon, and on the other side of the screen, you got names like Nvidia and AMD in the semiconductor space feeling a bit of pressure today.
You've got NVDA down almost 4% and AMD down a little more than 2%. You can find more information on TD advanced dashboard by visiting TD.com/advanced dashboard.
We are back now with Andres Rincon from TD Securities, talking ETF's.
People want to know, or at least this viewer wants to know, are there ETFs that are similar to every mutual fund out there? We were talking mutual funds earlier.
Do they have the equivalent in the ETF world?
>> There are more mutual funds in Canada or in the US then there are ETFs. So not exactly for every one of them but there are 1300 ETFs in Canada covering the entire spectrum, anywhere from carbon credits to crypto to equities to fixed income to active index.
So you can very likely find a very similar strategy in ETF land for your existing mutual fund. And if you are looking at an active space, like I said, it's 25% of the market in Canada is active so you can find an equivalent act of ETF in Canada.
So the answer is you can find a lot of the strategies that you currently have in your portfolio in it mutual fund land and also in ETF form.
>> This question just came in, this person was listening to our opening conversation.
He piques their interest.
Can your guest elaborate on the buffer accelerator products you mentioned earlier in the show?
Can he discuss some fund ETF managers in the US and Canada?
A bit of a deeper dive here on the buffer and accelerators.
>> How I would look at these is these are similar to structured note's in that the goal that these funds provide is once again a defined outcome.
An investor is paying into these funds knowing what their maximum upside and downside is and that is attractive to a lot of people.
Once again, they have many different structures, you have downside on a couple of them. But the most popular ones are there buffer ones and these are their original were more popular ones and that allows a lot of the investors to know how much downside potential they have or if they have full detection, let's say. They allow the investor to know how much upside they have.
Generally speaking, you get into these funds for like one or two years time because that's how the options are structured.
And those customers are comfortable knowing that in two years time, this is Biocon. I don't care if the market goes up 30% or goes down 30%, I know what my outcome is because it's already predefined.
And that's very common and very popular in the space right now. In the US, as you mentioned, in terms of issuers, innovator ETFs is really the leader in the space.
There are a couple of other ones but they are by far the biggest. In Canada, the only one that currently has a product on the shelf is first trust, which is also in the US. First trust has a buffer ETF and generally what that ETF does is, as the name provides, it provides you some downside protection.
It is limited. A certain amount of downside protection below a certain point.
But it also does so while not giving you full upside.
> Is going to say, that the key thing? If someone is looking at this, if you get 30% market safety, you're not gonna for early participate.
>> Most of these are often constructed by derivatives and they don't get a dividend.
You are not getting the full dividend on the S&P 500 for the NASDAQ or whatever it is you're being exposed to so that's key because they actually use the dividend to construct that option portfolio because that say let's say three, 4%, they are using it to buy protection and they are giving that to you and selling the calls to get more income to purchase that protection, let's say.
When using an option strategy, protection cost money in the same way that your house insurance cost money.
So in order for you to get that protection, they need to sell calls, Your upside and take the dividend.
Generally speaking, that's how broadly the strategies work but there are many flavours of this.
There are different under lawyers, different exposures like the accelerators which give you leverage to the upside as an example and there's ones that have become very popular in the US which give you know downside protection. Sorry, no downside at all.
If you buy the first day.
That's obviously a very interesting scenario.
Now, I mentioned that first trust has one in Canada. It be MO filed for accelerators and buffers in Canada. They should be coming out over the next two months.
Obviously, if you're an investor and he finds interesting, I would go to innovators for stress.
>> Always fascinating stuff, and is. You always bring new ideas to the table. A lot of suffer our viewers to think on. Think that.
At my pleasure. As I look forward to the next time.
Andres Rincon, head of ETF sales and strategy at TD Security. We thank him for being our guest today. Always make sure you do your own research before making any investment decisions. Stay tuned for tomorrow show.
Chris Whelan, Senior Canada rate strategist and head of portfolio and easy strategy with TD Securities is going to be on the program, taking your questions about the economy and interest rates. Of course, as Anthony was just telling us, we have the US inflation coming out in the morning. Might be talking about that off the top of the show as well.
You can get a head start with your questions for Chris. Just email moneytalklive@td.com.
That's all the time we have for the show today. Thanks for watching.
We will see you tomorrow.
[music]
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
coming up on today show, Andres Rincon from TD Securities will be our guests discussing the trends he is seeing in the exchange traded fund space.
MoneyTalk's Anthony Okolie is going to give us a preview of what to expect from tomorrow's US inflation report.
And in today's WebBroker education segment, Hiren Amin is going to show us the technical analysis tools available on the WebBroker platform.
Here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before you get our guest of the day, let's gave an update on the markets. We'll start here at home with the TSX Composite Index.
See what's happening there. We've got some money moving into the price of crude, supporting some of the energy stocks. We are just a bit above breakeven right now.
Will be generous, it points to the upside or just for takes, among the most actively traded names on the TSX with West Texas intermediate at almost 84 bucks per barrel are some of the energy it plays including Baytex, nothing too dramatic, up about 2.7% on that name.
Nuvei, an interesting name today, down about 37 1/2%. South of the border, the S&P 500, let's see what mood investors are in. As Anthony is going to live for us later in the show, we are going to get another inflation print out of the United States. What are the expectations? What could it mean for Fed policy? There's a lot going on there.
At 4462, we are down about 37 points right now or almost a full percent. The tech heavy NASDAQ, let's see where some of the pain points might be. A little more to the downside.
Definitely some tech selling today.
You're down about 1.2%. And Roblox, I never learned how to say this correctly, earnings miss. The stock is down 20%. You might say, what did these guys do?
I have to remind myself all the time as well.
They generate sales from a virtual currency called Roblox which kids used to buy in game features. The kind of in game features I always said no to for my kids.
And not to market update.
Equities have had a decent run so far this year, but is that performance leading investors to put more money toward stocks?
Here to discuss what he is seeing an ETF space is Andres Rincon, head of ETF sales and strategy at TD Securities. Great to have you back.
>> Thank you for having me.
>> There has been a lot of talk over the summer about Wall Street putting their toes back into stocks after the run that they've had. What's actually happening in terms of funds in ETF?
>> We are seeing the market have quite a bit of a rally and it's been inching up over the last couple of months. A lot of analysts now are reporting that they are seeing, inflation slow down. It maybe it's time to… However, on the flipside, we haven't seen that yet. If you look in the ETF space here in Canada, for example, call it $13 billion that's gone into fixed income ETF's.
Compare that to $7 billion in equity ETFs.
You might say well, that's the last few months. Talking about full-year numbers.
But that Is actually widening this year.
So right now we are at five, $6 billion and we are continuing to see that widening gap between flows in fixed income and equities.
Just in July, we saw $1.8 billion go into fixed income ETFs. So that's a staggering number in terms of how much money is going in there and I do think it's a shift in momentum in the direct investing space and also in the advisor space and that they see the yields even get in fixed income and that's why it's so attractive right now and a lot of money is going into that space.
>> So as funds flow in that direction, what kind of ETF products, we are talking fixed income, we are starting to break it down across several different kinds of products, was actually seeing the most interest from investors?
>> It's quite broad but there are two areas that have seen a lot of flows.
Number one is cash management ETFs or you can also call them high interest savings ETF. Basically, these are just bank deposits offered through a fun company and these are very popular.
The only pay about 5% and we are seeing a lot of flow there, called to the tune of $4.
8 billion this year alone.
A lot of money is going into these ETFs in these ETFs are relatively low risk and that they hold just in deposit with some of the banks. On the other side of that, you have money market ETFs, these are all true short-term products and these products have also been very popular.
These are T-bills, a variety of money market securities that are in these funds and they offer high yields in this environment and so they are obviously very attractive to a lot of investors.
And apart from those two, you get your traditional fixed income investment, aggregate bonds, alternative credit, a couple of different areas.
> When it comes to a high interest savings accounts or money market funds, what do investors need to keep in mind?
Yield is attracting people into the space but what do they need to be mindful of?
Yield isn't a guarantee forever.
> Right. If inflation starts going lower, then obviously rates will lower and these products will pay lower.
>> Let's talk about some of the parts of the market. These are interesting once he put before us that I'm not very familiar with.
Buffer and accelerator ETFs?
What are these?
>> Yes, they have become very popular in the US and slowly more in Canada. In the US you have a company called innovators ETFs which are the leaders in the space.
In Canada, you had first trust launch a couple of these and I'll be Mo has filed to launch more . His is a space that is quickly growing. Especially it is very popular with retirement community. And the reason they are poplars because they offered defined out come exposure.
unlike many of your traditional funds that go up and down in the market, they use options to construct portfolios that they have thisfixed outcome.
They have a variety of different outcomes offered to clients.
Some have limited protection, some of them have full protection, some of them have accelerated leverage. They call it accelerators or they have buffers.
And they can play around with the buffers in the leverage and what that ultimately gives you is exposure to the market but with a different outcome. So you might have, let's say, a 10% buffer on the downside what you might be 15% or higher.
If you will this product for two years, let's say, you might have a certain upsidewith a limited downside, let's say.
Or he might have full downside protection with limited upside participation.
And the accelerator case, you might have more leverage but one-to-one downside. So they have many different ways to give you exposure to give the investor's exposure and they become a lot more popular with those investors that are close to retirement and are worried about their downside protection.
>> When I hear leverage, I think about a certain amount of caveats that come with that.
What do people need to be aware of? They are looking at these products and see that they are leverage product.
>> With leverage, you have leverage to the upside and the downside sometimes.
Most of these have downside leverage that's one-to-one.
But at the end of the day, you have leverage exposure in many of these products and especially on the accelerator side. On the buffer side, was important to remember, not to get into the weeds, is these are usually popular and bought at the time that they are launched and not one or two months later because they do move in value as the markets move.
so if the markets move and the market is up 10%, that buffer is 10% lower.
So you do have downside in the scenarios.
So there complicated products, not easy to understand, but they become very popular with investors.
>> A very interesting space if people want to take a deeper look. I want to remind viewers that Andres has a show called Buyside Views where he speaks with fund industry executives about the trends they are seeing. The latest episode came out yesterday.
It features East Coast fund management to Mike MacBain and one of the topics he spoke about is why investors might not be as diversified as they think.
Have a listen.
>> What happens there is that I don't have any interest rate exposure. So I'm not correlatedto interest and that creates a separate risk profile for me because almost every other asset that is invested today, because of the intervention from central banks, almost every other asset is correlated to interest rates. So you think you gotta diversified 6040 portfolio of equities and bonds but really, you don't.
You've got a highly… That showed in spades in 2022.
>> Interesting commentary there from Mike about this idea of the 6040 portfolio and perhaps are not as diversified as you think.
Tell me a bit more about the show.
Mike show her some of the other shows.
>> TDs Buyside Views, we host a lot of our clients in the show where they can actually bring their perspectives and what's happening in their world and their markets and we were grateful to have Mike MacBainand he had the chance to talk a little bit about alternative fixed income, how it fits in Europe are fuller, some of the risks, some of the benefits of that space. So I do encourage, obviously, the listeners to join usat TD Securities.com, saponify, Google podcast, and you can find us on Buyside Views at TD Securities.
>> Interesting stuff and a lot more to come on the program.
We are going to get your questions about exchange traded funds for Andres Rincon in just a moment time.
And a reminder that you can get in touch with us any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on some of the top stories in the world of business and take a look at how the markets are trading.
We've got shares of Canadian grocer Metro in the spotlight today. The company is reporting a 14% jump in adjusted profit, that's on stronger-than-expected sales growth. While margins continued to feel the pressure of higher costs, Metro is saying it's seeing some moderation in food inflation.
We see the stock right now up modestly.
This earnings beat comes amid a strike of some 3700 Metro employees in the greater Toronto area.
That ride hailing company Lyft is sticking to its competitive pricing strategy.
This in an attempt to WIN riders away from their larger rival, Uber.
And while Lyft did manage to grow the number of active riders this quarter, the market perhaps has some concerns about the strategy.
The stock is down a little more than a percent.
Lyft appears to be doubling down on that competitive pricing approach, some observers are questioning the company's path the profit ability in light of that.
I want to check in on shares of flight simulator company is CAE, among the top performers on the TSX Composite today.
They are up almost 7%. The company handed in stronger than expected revenue and profit for its most recent quarter. And the flight simulator companies civil and defence business units posted sales growth in the low double digits.
let's do a quick check on the marketsnow.
We'll start your home on Bay Street.
Up modestly, seven takes periods of the border, day head of the next inflation print out of the United States, we have been sliding. We are down about 32 points right now in the S&P 500, a little less than 3 quarters of percent, just a little bit higher than when we started the program a couple of moments ago.
We are back with Andres Rincon, taking your questions about exchange traded funds. What range can one expect for ETF fees?what's considered reasonable in the space?
>> it can vary quite a bit but most importantly, it's a much lower range than in other investment spaces like mutual funds, for example.
so the average fee in the ETF world is about 40 beeps, so just lower than half a percent, let's say.
And if you look at the mutual fund space, that could be 2% on average. So I think on average, the mutual fund industry in Canada is over 2%. And that's just the management fee, let alone the management expense ratio of these funds which can at times be 3%, 4%.
So the ETF itself does a very good job of externalizing a lot of the costs.
That's why the whole industry has moved towards ETFs and because of that, the fee for a lot of the fund manager or cost for the fund managers is lower and as a result, the fees are lower.
What's really interesting is that generally speaking, the view has been that ETF's are cheaper because they are passive and mutual funds are more extensive because of the active, but that's not really the case.
We have a lot of actively managed ETFs in Canada. Call it 1/4 of the market in Canada is actively managed. And the average fee and that space is closer to 59or 60 or so.
For in next, it's 39.
It's very, very low fees across a gamut of strategies and the same goes for equity, fixed income and covered call in many different areas. So can vary, obviously, from seven beeps on the, you can get an ETF on the index base for that cheap, to say percent, but in reality, it's closer to that 50 beef range and that's obviously a far more economical way to get exposure for your portfolio in general.
> An investor is doing their homework in the HF space and they hear you say 40 beeps on average, and you see a ratio little bit higher than that, is this a question they should should ask themselves?
What's the strategy, our hands being put on this, what are you paying for?
>> You said it rightly, how often somebody put their hands on it. How systematic is the strategy versus how actively manages and strategy.
If you go the pure passive space, it can be much easier to manage these portfolios, so it requires fewer hands on these portfolios so it's cheaper, generally speaking, but then you have a cover call ETF which takes quite a bit of work from these PMs to buy the securities, manages portfolios, at the same time, roll those options, so naturally they will be more expensive. On the other side of the spectrum, from the expensive side, you will find alternative ETFs, long short strategies, these are fairly complex strategies and you can find that in mutual fund form and ETF form but they are a little bit more expensive and ETFs form because they are a lot more complex and require much more interaction from PMs.
> And a breakdown on the spacer. Another viewer has been reading about ETFs that say they have light leverage, for example 1.25 times.
Is that still too risky?
And are these better for short-term trades or long-term hold? A light leverage ETF, what is it?
>> These are relatively new to the Canadian market. We call them boosted ETFs.
they have 1/4 turn of leverage to a degree, some of them have a little bit more, but for the most part. These were really started by Hamilton ETFs and then Harvest did some in a couple of other issuers. And they are really interesting in that theyprovide more yield in the ETFs.
They boost the yield. If you look at ETFs, the focus is on more yield, not more exposure or more leverage.
that's why it's only a little bit of leverage. And what's interesting with traditional leveraged funds, similar to these, is there are daily resets in terms of their lives.
from a long-term perspective, you have to be careful, as you do with two times or three times leverage. Now these are only 1.25.
somebody's actually sell calls on them which upsets a lot of volatility to the fund.
They are a little better position as a long-term hold and their goal is the extra yield in these funds.
It's mostly banks and utilities. These portfolios are in themselves very low volatility portfolio.
They are constructed with those names in mind so they don't really impact the long-term performance of the portfolio.
>> You're talking at the time that you would hold any of these investment vehicles. Is that an important thing?
Perhaps some people get into ETFs and want a little more leverage but they are not understanding that this is a buy-and-hold strategy, these are meant for short-term trades?
>> That's a very good question. These are path -dependent funds and they have daily leverage, stay offer you daily two times or three times, not long-term returns.
They are not meant to be held as long-term investment. They are meant to be held as trading vehicles.
>> Interesting stuff.
Another question now.
This one about the industrial space.
Viewer wants to know, are there any Canadian listed industrial ETFs?
>> There are many.
Industrials is a very common area for a lot of the ETFs managers in Canada.
A lot ETFs have exposure to waste management, airlines, and various areas in the industrial space.
I'm not going to memorize all the names of the ETFs, there's over 1300 ETFs in Canada,but Z IN from BMOis one, XGIFHG.
You have a variety of ETF to look at the specific area here in Canada or globally.
As you said industrials is a pretty broad basket. You want to talk about rail, airlines, garbage.
>> Exactly.
Names like that will show up in these baskets. It could be North America centric, it could be global centric.
Generally speaking, they are not purely Canadian centric.
> Interesting stuff. Let's take another question here about Japan.
Warren Buffet recently invested more in Japan.
Can you discuss any ETF that cover Japan?
What's going on with Japan coming up more recently in discussion?
>> not quite sure why we are seeing more interest in Japan.
it might be interest into developed, non-developed, more of that story. As Asian countries are in the developing stage and it's become a bit of a tougher environment, you see more interest in Japan and that's what we see, it's very steady.
The story is well known for Japan.
That's what we see often, a move towards Japan at some points in time. In terms of ETFs, there are ETFs in Canada and the US the focus on Japan. One of the bigger ones in Canada is JPM and also JPN, these are from PMO. these are simple products, market cap weighted ETFs that cover the Japanese market.
And local securities.
>> Gives the viewers a place to start the research. Make sure you do your own research before you make investment decisions. Will he be back to your questions for Andres Rincon on ETFs in a moment.
And a reminder that you get in touch with us at any time.
Just email moneytalklive@td.com.
Now, let's get our educational segment of the day.
Technical analysis is one strategy you may consider when sizing up a potential investment. Hiren Amin, Senior client education instructor at TD Direct Investing and trends is now with a look at how you can find those tools on WebBroker.
Great to see you again.
let's talk about investors wanting to learn more about technical analysis. Were they go here?
>> All right. Great to be back again.
Technical analysis is such a vast field for a lot of traders to analyse their stocks.
One of the central tenets behind technical analysis is really to look at trends and gauge trends on underlying securities.
We want to see uptrends, downtrends, sideways trends, and momentum.
There some importance in understanding trends in this field of research but for many people out there, they don't know where to get started or where to begin.
You could just go out and buy a big lumpy textbook and then try and see if you can decipher it, but you might be more lost than you are found. But that's where WebBroker has you covered.
We have the tools to make technical analysis a little less technical. I'm going to show you that in a moment.
Let's jump into WebBroker over here.
Now it's in here, I want to take us to the technicals page. You can start by clicking the research tab and under the markets column, go to the very last tab that says technicals.
Now within this page… We have basically this is the formal paid for technical analysis to get started and there's a lot of handholding there stunned over here.
You are not going to be lost.
You have a wealth of information to help you decipher all this information.
on this landing page, what your first seeing is a breakdown of some technical events that are occurring right now in the market. You will first notice that any recently viewed stocks that you are interested in will show up at the top of the carousel. Then you have the most bullish views that are a gauge of the last week, smart technical indicators, most popular section, and these are the most researched stocks in the last week for a lot of investors. Then you have some that are trending now with a comparison between the previous 90 days to the current week, and then there's bearish events.
Within each of these, there is an informational box. You can hover over it to tell you exactly what it is. But the thing I really want to point everyone to is how do you get learning about technicals? How do you make sense of all this? If you look to the top right, we have a graduation cap and there's actually an educational section within here and a lot of the stuff that you see on this page or within the research pages going to be explained here. See him go to classical patterns.
It'll tell you a lot about those chart patterns that we look at.
If you want to look at short-term things, you can look at some of the candlesticks and what they form and indicators, sorry, I should go to oscillators.
That's where a lot of these studies inform us about the use technical events. It's a great tool to get started with. The last thing I want to point out was a featured ideas page as well.
You can come within here and the software will give you some of the best featured ideas for the week broken down over here both by bullish, the ones that show up in green, and bearish, for the week over here.
From here, you can create your own list.
You can see the drop down. These are the ones that are presented to you but if you have any stocks that you are watching, this can also be presented right there as well Greg.
>> Okay. Lots of good information there.
What if you want to be notified of a specific security changes their trend?
>> Absolutely.
So what you can do, there are a couple of things you can do. If you are monitoring a number of different stocks, you have the ability to create a watchlist.
I'm going to go back onto the technical insight page, the homepage, and within the menu I go to my watchlist. I've already got a watchlist started. I called it automakers. There are number one so no one to track it.
We're just going to add one in here. We will call it and I oh, one of the new electric manufacturers of vehicles. You can throw your specific companies in here and then if there's one you want to specifically monitor, let's say I want to monitor Anaelle, I click on it and it will bring me all the technical events that's taking place on the stock, broken down by different time frames, but the alert function is this alert bell over here.
You can click on this and then choose what type of technical event you want to be alerted to, and most commonly, we can do something like an indicator, you can click the drop-down and choose what type specifically or you can base it off of a price alert as well. So you can set these alerts up and let's say we want to set an alert up if it goes past nine dollars, I'm just being one on price, and then set alert and then go to alert centre and we can manage the alerts and see what's happening with them over here.
This is a way to keep tabs on any technical events on any stocks you are keeping an eye on.
>> Great stuff as always. Thanks for that.
> My pleasure.
>> Hiren Amin, senior client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Now before you back to your questions about ETFs for Andres Rincon, a reminder of how you can get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.
com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Okay, we're back with Andres Rincon, taking your questions about ETFs.
A couple of these came in the last couple of moments. Which ETFs offer concentrated exposure to AI related stocks? The big one this year, artificial intelligence.
>>in the US, there are a couple.
In Canada, there are none that have that name in the label. In the US, a very popular one is BOT Z. It's been there for a long time.
It is offered by global acts and it's one of the more popular ones that offers exposure really to the chips which is where AI is growing. So any fund that has exposure to the chip industry is really now being re-labelled AI because obviously it's a very popular area to invest in now.
In Canada, you have a group of funds that while they are not directly in the name also are very heavily exposed to the AI space. So one example is edge from Evolve ETFs which gives you exposure to a lot of the chip manufacturers and a couple of different areas that are exposed to AI.so one of the issuers here, horizons ETFs, it is the same parent company as global acts and they have a very similar fund here but they haven't labelled it.
but in reality, it's very similar to BOT Z in the US. They have equally or similarly an innovation fund here. Many managers have innovation funds that are investing in AI but BOT Z is top of mind in the US.
>> Interesting space for viewers to do their homework on how they feel about artificial intelligence going forward.
Earlier we were talking about cash management or high interest savings ETFs.
Someone wants to know if they are eligible through the CDIC?
>> The short answer is no, they are not CDIC eligible. If that matters to you, thenBank HIFCAs would be the right place for investing.
> Because some of these vehicles are actually mutual funds, right? And mutual fund can go up and down in value.
I think what some of these money management funds, it's not expected to but it's not impossible for them to.
>> They are really not supposed to at all given that is just a bank deposit. All they do is a cumulative interest in paid out.
There really is no movement to the downside.
But because it's under a fun structure, it's not under the same regulations as a bank HIFCAs.
>> Interesting stuff and distinction there. We talked about Japan earlier.
Someone says that to them at least that this would be the right time to get into China. Is there a China or Asian ETF that you could recommend?
We can't give specific buy or sell recommendations on the show were strategies but let's talk about China.
>> China is very interesting because it's hard to get into from an investor's point of view. So for China, you can invest in mainland securities, you can invest in Hong Kong securities or you can invest in mainland securities that are denominated in other currencies.
In order, you have the a shares, the H shares and the B shares. What investors need to understand is that what you want exposure to?
If you want exposure to real China, you need a shares exposure.
If you want exposure to Hong Kong has to offer, then it's a share.
In order for you to invest in a shares, you need to be invested through a local affiliate or bank.
It's more complicated to do so. In the US, there are several ETFs to do that. In Canada, you have a couple of ETF to give you that exposure.
gives you exposure to a shares if that's what you want specific leave. If you want more broadly China, a shares and other areas, the biggest ones are XC age and Z CH issued from BMO and actors that give you exposure to a broad China but not necessarily a shares.
People need to do their homework on that end.
>>good places for people to start their search. Someone says they are looking for global ETF without Canada or the US. Any suggestions? A global player where you're taking the north American countries.
>> What we call global ex-US and Canada is global international.
There is a slew of ETFs in that space.
There are many, many international ETFs on the passive side, active side and fixed incomes IT.there is a variety of ETF's.
But for simple city, a couple of the biggest ETF here in Canada are in the space.
If you look at Z EA or XES, they are both from DMO and from iShares, those ETFs are fairly sizable passive the ETSthat don't touch North America.
>> We were talking about artificial intelligence earlier. Electric vehicles haven't gone anywhere. What ETFs give you the best exposure to the EV space?
>> Once again, it's back to the chip space.
These ETF's, generally speaking, give you exposure to the entire supply chain.
I see why the interest is there.
People might think that electric cars are a couple years out, all the new cars will probably get there, and if they do, you will need exposure to the supply chain and that's the manufacturers of the cars, the components of the cars, the batteries, for example.
So in Canada, you have cars, one of the few and first automotive focus ETFs in the world. That's also from evolve ETFs.
As you can see, although somatic ETFs come from the evolves and the horizons and many of these issuers. But cars get you exposure to many of these different areas.
From iShares, you have asked DRV which gives you exposure to a smaller subset of securities.
>> Of course, when it comes to trying to figure out whether you are an EV person or an AI person, you got to do that research.
We will get back to your questions for Andres Rincon on ETFs in just a moment time.
Make sure you do your own research before making any investment decisions. Do you have a question about investing or what's driving the markets? Our guests are eager to hear what's on your mind, so send us your questions. There are two ways you can get in touch with us. You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send. We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Inflation hasn't been far from our minds this year as investors. Of course, the last time he got an inflation print out of the US it was for June, the 12th straight month, it was lower than March 2021 but we are going to get some fresh data out tomorrow morning.
Is that slowing trend expected to continue? Our Anthony Okolie has been digging into a TD Securities report. What do they say?
>> TD Securities is looking for headline inflation in July to come in at 0.2% month over month.
The big drivers of headline inflation will likely be higher gas prices due to a late surge in July after 6% jump in July.
No TD Securities also believes that Americans paid more for things like groceries in June. TD expects the prices to show a stronger .
3% month over month jump.
Of course, food prices, grocery store prices and eating out were all costlier in June and the United States.
In terms of core inflation, this is something that the Fed will focus on closely.
TD Securities expects core inflation to remain largely unchanged.
this is likely due to core goods prices shifting more to deflation.
Looking ahead, they expect core inflation to keep losing momentum after July, reflecting software goods prices as well as services driven by housing. Meanwhile, rent and rent a primary residence are expecting to show a modest increase in July.
TD Securities expects shelter inflation peaked on a year-over-year basis in Q2 of this year.
Meanwhile, TD Securities is also forecasting a drop in used vehicle prices in July and those prices will continue to fall through September. TD Securities expects to see a pickup in vehicle production which will improve the supply demand imbalance that we have seen in the auto market most of this year. Finally, on wage growth, this is something that the Fed will be watching very closely. Data is pointing to further normalization after hourly earnings peaks a year ago. However, TD Securities says that the process is likely to be prolonged and they expect wage growth is slow to about 3 1/2% on a year-over-year basis.
>> A lot of things going on in there.
But if this is TD Securities take on all this, what do they think it means for the next Fed rate decision?
>> TD Securities expects the Fed to skip a rate increase in September with July's rate hike likely the last in the Fed's tightening cycle. If we get a weaker print, that may add to the inflation deceleration seen in most recent PC report in June, which will create a case for the Fed to pause. Still, TD Securities says the Fed will be looking at the totality of the data and we have a few prints to go before they see enough proof of slowing of inflation to warrant a pause. Currently, the markets are pricing, continue to price and less cuts with 24 basis points less cuts today than at the July Fed meeting.
>> We are going to find out tomorrow morning with that print tells us. Thanks, Anthony. Big day indeed. MoneyTalk's Anthony Okolie.
Let's get you an update on the markets.
We are having a look at TD's advanced dashboard. This is the platform designed for active traders available through TD Direct Investing.
This the heat map function we have upon the screen. He gives you a view of the market movers.
We are taking a look at the TSX 60, screening by price and volume. Let's see what we have on the screen. We have a firming and crude prices not only today but we've sort of been on a move upward for the past month for the most part.
See you can see a lot of green on the screen. Nothing is to outsize. You've got Enbridge, CNQ, Suncor, basically on that side of the screen, you can see names in positive territory.
The brightest piece of green on the screen, at least on my side, is CAE, the flight simulator company. We told you earlier it was moving higher on its latest earnings report.
Where can I find some weakness here?
QSR, Restaurant Brands International, the stock is down modestly, 1.6% today, a day after reporting its latest earnings. Of course, you can do a lot with the heat map. It's not just the TSX 60. There are a number of ways to screen through.
Let's go to the SNP 100 on the screen.
Energy company south of the border benefiting from the firming price of crude, including XOM, Exxon, and on the other side of the screen, you got names like Nvidia and AMD in the semiconductor space feeling a bit of pressure today.
You've got NVDA down almost 4% and AMD down a little more than 2%. You can find more information on TD advanced dashboard by visiting TD.com/advanced dashboard.
We are back now with Andres Rincon from TD Securities, talking ETF's.
People want to know, or at least this viewer wants to know, are there ETFs that are similar to every mutual fund out there? We were talking mutual funds earlier.
Do they have the equivalent in the ETF world?
>> There are more mutual funds in Canada or in the US then there are ETFs. So not exactly for every one of them but there are 1300 ETFs in Canada covering the entire spectrum, anywhere from carbon credits to crypto to equities to fixed income to active index.
So you can very likely find a very similar strategy in ETF land for your existing mutual fund. And if you are looking at an active space, like I said, it's 25% of the market in Canada is active so you can find an equivalent act of ETF in Canada.
So the answer is you can find a lot of the strategies that you currently have in your portfolio in it mutual fund land and also in ETF form.
>> This question just came in, this person was listening to our opening conversation.
He piques their interest.
Can your guest elaborate on the buffer accelerator products you mentioned earlier in the show?
Can he discuss some fund ETF managers in the US and Canada?
A bit of a deeper dive here on the buffer and accelerators.
>> How I would look at these is these are similar to structured note's in that the goal that these funds provide is once again a defined outcome.
An investor is paying into these funds knowing what their maximum upside and downside is and that is attractive to a lot of people.
Once again, they have many different structures, you have downside on a couple of them. But the most popular ones are there buffer ones and these are their original were more popular ones and that allows a lot of the investors to know how much downside potential they have or if they have full detection, let's say. They allow the investor to know how much upside they have.
Generally speaking, you get into these funds for like one or two years time because that's how the options are structured.
And those customers are comfortable knowing that in two years time, this is Biocon. I don't care if the market goes up 30% or goes down 30%, I know what my outcome is because it's already predefined.
And that's very common and very popular in the space right now. In the US, as you mentioned, in terms of issuers, innovator ETFs is really the leader in the space.
There are a couple of other ones but they are by far the biggest. In Canada, the only one that currently has a product on the shelf is first trust, which is also in the US. First trust has a buffer ETF and generally what that ETF does is, as the name provides, it provides you some downside protection.
It is limited. A certain amount of downside protection below a certain point.
But it also does so while not giving you full upside.
> Is going to say, that the key thing? If someone is looking at this, if you get 30% market safety, you're not gonna for early participate.
>> Most of these are often constructed by derivatives and they don't get a dividend.
You are not getting the full dividend on the S&P 500 for the NASDAQ or whatever it is you're being exposed to so that's key because they actually use the dividend to construct that option portfolio because that say let's say three, 4%, they are using it to buy protection and they are giving that to you and selling the calls to get more income to purchase that protection, let's say.
When using an option strategy, protection cost money in the same way that your house insurance cost money.
So in order for you to get that protection, they need to sell calls, Your upside and take the dividend.
Generally speaking, that's how broadly the strategies work but there are many flavours of this.
There are different under lawyers, different exposures like the accelerators which give you leverage to the upside as an example and there's ones that have become very popular in the US which give you know downside protection. Sorry, no downside at all.
If you buy the first day.
That's obviously a very interesting scenario.
Now, I mentioned that first trust has one in Canada. It be MO filed for accelerators and buffers in Canada. They should be coming out over the next two months.
Obviously, if you're an investor and he finds interesting, I would go to innovators for stress.
>> Always fascinating stuff, and is. You always bring new ideas to the table. A lot of suffer our viewers to think on. Think that.
At my pleasure. As I look forward to the next time.
Andres Rincon, head of ETF sales and strategy at TD Security. We thank him for being our guest today. Always make sure you do your own research before making any investment decisions. Stay tuned for tomorrow show.
Chris Whelan, Senior Canada rate strategist and head of portfolio and easy strategy with TD Securities is going to be on the program, taking your questions about the economy and interest rates. Of course, as Anthony was just telling us, we have the US inflation coming out in the morning. Might be talking about that off the top of the show as well.
You can get a head start with your questions for Chris. Just email moneytalklive@td.com.
That's all the time we have for the show today. Thanks for watching.
We will see you tomorrow.
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