KG: Amit and I worked together at a global investment firm in Toronto nearly two decades ago. In some ways, that shared experience led to common ground on portfolio construction and risk management. When I joined BMO Global Asset Management in 2009, it made perfect sense to recruit him for building our new business in Hong Kong, and later our multi-asset solutions team in Toronto. The shared history provides us with closer, stronger linkages than you’ll find at other investment houses.
AP: I agree – and our relationship has also allowed us to create a positive feedback loop between our teams. From the multi-asset side, it’s helpful to have support when implementing ETFs in our portfolios. I already mentioned how ZAG helped us navigate a liquidity freeze at the start of the coronavirus panic. That’s just one example. And in return, we deliver feedback to Kevin’s team, helping them better understand the challenges we’re facing, refine existing strategies and build new tools.
KG: Unlike ETF providers who cater almost exclusively in-house, the majority of our business is external. The real benefit of an internal multi-asset team is that we get to test our strategies before putting them out to the street. We can be fairly confident that if they need something, the industry will need it as well. For example, if we hear them ask for small cap, we can be relatively sure there’s demand elsewhere. It’s a feedback loop that helps with engineering our solutions.
AP: Take ESG as another example. Responsible investing has become a macro trend in the marketplace, and we noticed there’s an inherent sector bias in equities that fall into the category. The governance factor in particular leads to companies that are, potentially, better equipped to manage crises. With that knowledge in hand, Kevin’s team has introduced perhaps a broad suite of ESG ETFs in Canada, spanning multiple asset classes so we can pick and choose the pieces we need to execute our investment strategy.
KG: Our approach wasn’t really channel specific, but most of the demand we’ve had in the past two years has come from Investment Advisors who see the writing on the wall. They’re asking us about these solutions, and their clients are asking them. Plus we’re on the verge of an immense wealth transfer from Baby Boomers to younger clients who are more inclined toward ESG solutions. So there are incentives for everyone to have a conversation about growing in a more responsible way.
For more insights from Kevin Gopaul, Global Head of ETFs, BMO Global Asset Management, read The Next “Leap of Faith” for ETFs, and visit BMOETFs.com. To learn more about the Multi-Asset Solutions Team, read the June 2020 Monthly Commentary.