We recently attended a U.S. financial services conference in New York City and had the opportunity to meet with executives from seven mid-cap banks. These meetings were of particular importance to us, as the Hamilton Capital Global Bank ETF (HBG) has ~46% of NAV invested in the U.S., with the majority of that in banks with less than US$50 bln in assets. Given the relatively low…
Insights: Hamilton ETFs
HBG: Raising U.S. & Australian Bank Exposure Post-Pullback
Supported by active management, the Hamilton Capital Global Bank ETF (HBG) continues to enjoy material outperformance. The since-inception returns have exceeded the global banks index by ~11%[1], despite comparatively lower drawdowns relative to major indices. In the past month we made two noteworthy adjustments to the ETF’s country weightings. On February 14th we posted an HBG Comment disclosing that we had recently reduced our weighting to…
HBG: EPS for U.S. Bank Portfolio Grows 15%+ in Q1
U.S. banks are by far the largest portfolio within the Hamilton Capital Global Bank ETF (HBG) and over time, we expect this group will represent between 30% and 50% of the ETF. As we have written previously, we typically prefer U.S. mid-cap banks over their larger peers because they: (i) are generally more rate-sensitive, (ii) are merging, and (iii) are growing earnings faster. In fact, during…
JPM Investor Day: Capital Return, Tax Reform, and Interest Rates
As we have written in the past, in the Hamilton Capital Global Bank ETF (HBG), we generally prefer mid-cap U.S. banks over their larger peers. With respect to the Hamilton Capital Global Financials Yield ETF (HFY), our U.S. bank allocation is very small (~6%), because yields for the sector are among the lowest in global banking (although we expect them to rise in the next two…
HBG: EPS for HBG’s U.S. Bank Holdings
The Hamilton Capital Global Bank ETF (HBG) currently has exposure to 27 U.S. banks, spread across 21 different states, representing 42% of the ETF. As we have written previously, we favour a portfolio drawn from the universe of over 200 U.S. mid-cap banks over their larger peers because they: (i) are more rate-sensitive, (ii) are growing earnings faster, and (iii) are merging. This quarter underscored –…
HBG: Raising U.K. Exposure
In the Hamilton Capital Global Bank ETF (HBG), we expect U.K. banks, including the so-called “challenger banks” over time, to represent between 5-10% of the ETF. However, in HBG’s first year, the prospect of Brexit resulted in much lower weights (generally between zero and 5%). In addition, we also consistently hedged our pound currency exposures. However, our positioning on the U.K. (and the U.S.) has recently…
U.S. Banks: Another Tough Quarter for Mega-Caps as All Four Experience Negative Q/Q EPS Growth (and Four-Year Near-Zero Growth Trend Persists)
On February 7th, 2017, we will be launching the Hamilton Capital Global Financials Yield ETF (HFY). It is the aspiration of HFY to generate “REIT-like yields, with positive rate sensitivity”. Therefore, we anticipate that HFY would have close to zero exposure to the four mega-cap banks primarily while their yields are very low. There are nearly 400 global financials with yields in excess of 5%, and…
HBG: Reducing European Exposure on Italian Referendum Uncertainty
November 22, 2016 by Jennifer Mersereau Since the Hamilton Capital Global Bank ETF (HBG;TSX) launched, the ETF has limited its exposure to Italy owing to the banking sector’s significantly higher volatility, as well as HBG’s preference for exposure to European countries with higher/reliable dividend yields (i.e., we favour banks with lower regulatory and capital risk). This limited exposure has been despite Italy being one of the…
Notes from Florida Bank Tour: Commercial Real Estate Lending and M&A under the Microscope
We recently traveled to Florida to meet with a group of mid-cap banks. Of the 12 banks that participated on the trip, 9 are headquartered in Florida (2 Arkansas, 1 from New Jersey), and 10 are publicly-traded[1]. Of the publicly-traded banks, the median asset size is US$5.0 billion, the median market cap is US$841 million (US$1.5 billion average), and the median expected loan growth in 2016…
On HBG, Post-Brexit Rebound Portfolio Changes: Increasing Cash by Reducing South America; U.S.
As previously disclosed, the Hamilton Capital Global Bank ETF (HBG) entered the Brexit referendum vote on June 23rd with ~12% cash and materially underweight U.K. banks (see our July 6th HBG Manager Comment). This provided an opportunity to strategically deploy cash/add positions after the “Leave” side declared victory and global bank stocks declined sharply. In the two trading days following the Brexit vote, the global banks…
On HBG: With Focus on Mid-Caps, U.S. Bank Holdings Generate 13% Y/Y EPS Growth in Q2 – Significantly Outpacing Sector
Over time, we expect to have 50% exposure to North America in the Hamilton Capital Global Bank ETF (TSX; HBG). As stated in our note, “HBG: Post-Brexit Portfolio Changes” (July 6, 2016), we went underweight Canada (to 0%) and increased our exposure to the U.S. (to 44%) heading into Q2 earnings season. Entering earnings season, HBG had positions in 26 U.S. banks, of which 19 were…
HBG: Post-Brexit Portfolio Changes
The Hamilton Capital Global Bank ETF (HBG) held almost 12% cash leading up to the Brexit vote on June 23rd, which provided an opportunity to strategically add positions after the “Leave” side declared victory and equity markets and bank stocks declined sharply. From Thursday June 23rd to Monday June 27th, the global banks experienced a sharp correction, falling 11%. The European banks took the brunt of…