By: James Lord
Bristol Gate Capital Partners, a boutique Toronto-based investment manager, has unveiled its first ETFs with the launch of the Bristol Gate Concentrated Canadian Equity ETF (BGC CN) and Bristol Gate Concentrated US Equity ETF (BGU CN) on the Toronto Stock Exchange. The funds are actively managed and invest in relatively concentrated portfolios of Canadian and US-listed equities respectively with a focus on dividend payers. BGC will invest in companies from within the S&P/TSX Composite Index while constituents for BGU will be selected from the S&P 500 Index. Bristol Gate employs a proprietary methodology that forecasts dividend growth for the coming 12 months and uses fundamental analysis to determine the firms most likely to consistently grow their dividends into the future. Constituents are equally weighted within the portfolio which is rebalanced on a quarterly basis.
The firm uses machine learning in constructing portfolios which it says helps it to improve risk/return profiles and avoid the emotional bias in the investment process. It also sets a dividend hurdle rate annually based on the lowest predicted dividend growth rate in the portfolio. If a company falls below the dividend hurdle it will likely be sold from the portfolio.
BGC currently has 25 constituents. The largest sector exposures are fairly evenly split between industrials (16.2%), financials (16.0%), consumer discretionary (15.9%), consumer staples (15.8%) and utilities (12.0%). Its allocations are notably underweight financials which accounts for 35.3% of the benchmark, and overweight consumer staples and consumer discretionary which account for just 3.6% and 5.5% respectively in the benchmark.
BGU currently has 22 constituents with significant exposure to the industrials (27.3%), consumer discretionary (23.2%), information technology (18.0%), health care (13.6%) and financials (9.0%) sectors. These allocations are notably overweight industrials and consumer discretionary which account for 10.3% and 12.6% of the S&P 500 respectively. It is also underweight financials and information technology which hold weights of 14.9% and 24.2% in the benchmark respectively. The funds trade in Canadian dollars, and a US dollar-denominated share class for the US equity ETF is available under the ticker BGU.U CN. Each fund has management fees of 0.70%.
To view this article click here
There is a risk of loss inherent in any investment; past performance is not indicative of future results. Prospective and existing investors in Bristol Gate’s pooled funds or ETF funds should refer to the fund’s offering documents which outline the risk factors associated with a decision to invest. Separately managed account clients should refer to disclosure documents provided which outline risks of investing. Pursuant to SEC regulations, a description of risks associated with Bristol Gate’s strategies is also contained in Bristol Gate’s Form ADV Part 2A located at www.bristolgate.com/regulatory-documents.
This piece is presented for illustrative and discussion purposes only. It should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities and it does not consider unique objectives, constraints, or financial needs of the individual. Under no circumstances does this piece suggest that you should time the market in any way or make investment decisions based on the content. Investors are advised that their investments are not guaranteed, their values change frequently, and past performance may not be repeated. References to specific securities are presented to illustrate the application of our investment philosophy only, do not represent all of the securities purchased, sold or recommended for the portfolio, it should not be assumed that investments in the securities identified were or will be profitable and should not be considered recommendations by Bristol Gate Capital Partners Inc. A full list of security holdings is available upon request. For more information contact Bristol Gate Capital Partners Inc. directly. The information contained in this piece is the opinion of Bristol Gate Capital Partners Inc. and/or its employees as of the date of the piece and is subject to change without notice. Every effort has been made to ensure accuracy in this piece at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and Bristol Gate Capital Partners Inc. accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. We strongly recommend you consult with a financial advisor prior to making any investment decisions. Please refer to the Legal section of Bristol Gate’s website for additional information at bristolgate.com.
A Note About Forward-Looking Statements
This report may contain forward-looking statements including, but not limited to, statements about the Bristol Gate strategies, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events and conditions or include words such as “may”, “could”, “would”, “should”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate” and similar forward-looking expressions or negative versions thereof.
These forward-looking statements are subject to various risks, uncertainties and assumptions about the investment strategies, capital markets and economic factors, which could cause actual financial performance and expectations to differ materially from the anticipated performance or other expectations expressed. Economic factors include, but are not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. Readers are cautioned not to place undue reliance on forward-looking statements and consider the above-mentioned factors and other factors carefully before making any investment decisions. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith. Forward-looking statements are not guarantees of future performance, and actual results could differ materially from those expressed or implied in any forward-looking statements. Bristol Gate Capital Partners Inc. has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, except as required by securities legislation.