Comprehensive covered call ETF strategies across all North American sectors

David Kitai  00:00:08 

Hello and Welcome to a very special episode of WPTV. My name is David Kitai, Senior Editor at Wealth Professional. This summer, we hosted the 10th annual WP awards celebrating the best and brightest in the wealth management industry, from advisors to investment solution providers. Hamilton ETFs was one of the investment providers recognized, named as an Excellence Awardee for ETF provider of the year. To discuss their recognition, we are lucky to be joined by Patrick Somerville, Senior Partner and Co-President at Hamilton ETFs and Jennifer Mersereau, Senior Partner, Co-founder and Co-president at Hamilton ETFs. Patrick. Jennifer, thanks for joining us. 

Patrick Somerville  00:00:45 

Thanks for having us, David.  

Jennifer Mersereau  00:00:46 

Thanks. 

David Kitai  00:00:48 

So let’s start right off the bat with maybe the big question coming out of the awards. Why do you folks think that you were recognized? 

Patrick Somerville  00:00:55 

Sure, I think it’s largely a function of our significant growth last year, and also maybe a combination, too, of our growth with some launches of some innovative ETFs as well. But just to give you some context, we began the year at about 1.8 billion in AUM, and then we ended the year at 3.8 billion. So we had growth over 100% which was a terrific year, so we’re quite proud of that. And today, here we sit halfway through, or more than halfway through, 2024 and we’re currently about 5 billion. So the growth has continued, and yeah, things are going very well for us. 

David Kitai  00:01:32 

Okay, congratulations. I mean, that is significant growth. I guess you know, as you look at that growth. What would you attribute it to? Patrick, you mentioned, you know, some innovative product, product launches, but, but what specifically do you think has driven that growth for you?  

Patrick Somerville  00:01:48 

Yeah, a lot of the growth has come mainly from our covered call ETFs. We launched a suite of what we call yield Maximizer ETFs, and we built that out over last year, where we now cover or have a strategy, a covered call strategy in virtually every popular North American sector, allowing investors to earn higher income from sectors, preferred sectors in North America. So that suite’s been growing quite rapidly. It’s an innovative approach to covered calls. This is not a category that’s new, but we took a unique spin on it when we launched the suite where we have an income first approach to cover calls. So we’re emphasizing the income more so than growth. And as demographics have been changing, we’ve noticed, you know, higher demand for higher monthly income. So these strategies are built for investors like that.  

David Kitai  00:02:42 

So these innovations and product launches have been amazing, and it’s interesting to see the way you’re engaging with the advisor market. But as you look at the growth that you’ve already experienced, what would you attribute that to internally within Hamilton ETS, what within your organization has driven that growth? 

Jennifer Mersereau  00:02:57 

Now that’s a great question. The reality is, as much as we’ve grown in assets over the last couple of years, we’ve grown in personnel at the same time. So there’s been a lot of growing pains here, but everyone here is like top notch, and has done a fantastic job. I know Pat and I have talked about this a lot, about how much we enjoy our team. We think we have one of the best teams on the street. They’re smart, they’re funny, they’re innovative, they’re a great bunch of people to come in to work every day with, and we do enjoy the collaboration and the and the community that we’ve created here we have, I mean, I could name everybody i But I definitely should name back asadi, our head of Prague strategy, who has been right there with bringing forward some ideas. But it’s still, it’s at the end of the day. It’s a complete team approach. We don’t take for granted anybody within the team. We know every effort from you know, preparing the prospectus to preparing the marketing materials, to talking to advisors, etc. It’s like we couldn’t do any of this without them. And it might seem cliche to say, but I 100% 100% back that idea when it comes to our team. 

David Kitai  00:04:19 

So who would you say is the sort of investor that you you are looking to serve? 

Patrick Somerville  00:04:24 

Yeah, I think it’s a combination, right? So there’s the income focused investor, which would, you know, be suitable for our covered call, ETFs. So our yield Maximizer, ETFs, there’s the total return the more growth oriented investors that are comfortable with a little bit of leverage, modest leverage modest leverage of 25% so they would be might want to take a look at our enhanced suite of ETFs, and then we have our core Canadian bank in Financials, ETFs, which can serve as a core holding, as a stock substitute for anyone’s financials holdings. So. So there’s really, there’s really three pillars to our to our AUM, and all are built for a different type of investor. 

David Kitai  00:05:06 

The macro environment is changing now, whether that’s with interest rates or the level of uncertainty in the market or changes in equity trends, what are you doing to adapt to a changing and uncertain macro environment? 

Patrick Somerville  00:05:21 

Yeah, the macro environment, it’s always evolving. I think it’s critical for us to again, maintain an active dialog with advisors and get a feel for their needs. I’ll give you an example. So when quantitative easing finished and we went into a tightening period, that was really a big change for fixed income markets. Up until then, there were no fixed income covered call strategies. We were the first to launch a covered call fixed income strategy with H bond. And really what was changing was the quantity of tightening reintroduced bond market volatility. And as you know, volatility is critical for option strategies. So that was really a cue for us, and it enabled us to launch a product like that. And obviously, fixed income had had a rough couple years, and we thought it was pretty timely to launch something like that. So that’s just an example of us evolving with the changing macro landscape. And you know, we’ll continue to take our cues from from the market and from the people we speak to. 

David Kitai  00:06:24 

Okay, excellent. As something of a fine question. You know, the advisors who are watching this today, what do you hope they take from the work that you’ve been doing, these innovations, these new products, and your outlooks? 

Jennifer Mersereau  00:06:36 

Yeah, so I think, I think advisors would who are familiar with us, which is growing all the time, I think that they would know that we are very responsive to their questions, their needs, but in addition to that, as as Pat alluded to listening to what they are actually wanting, but educating them as well, and helping to educate their clients on both our products as well as the broader landscape. So I think we’ve really mean when we started years, quite a few years ago. Now, it was all about the advisors and getting it out to branch meetings and educating them. At that point, more on the Canadian banks. But over time with with Nick’s edition, our covered call suite, we’ve continued to expand the webcast we do. But I think the the the message, I would hope they take away, is we’re listening, and we’re, you know, we want to be great partners, and we’re not just trying to launch products for the sake launching products. We want to, you know, help fulfill their needs.  

Patrick Somerville  00:07:43 

We want to be balanced in our approach. So we have these, these different pillars of our of our ETF lineup, and it’s not a one size fits all. There’s different strategies for different people, and we’re trying our best to properly position those with advisors so they know the, you know, the risks and trade offs so they can properly put those in the portfolios, knowing everything that’s that’s under the hood. We are, you know, very committed to ongoing education through webcasts CE credit webcasts, because of our core specialty in the Canadian banks and global financials area, we will continue to put out frequent content on the Canadian banks and timely content that we think will help the advisors and their clients. And, yeah, we’ll, we’ll continue to remain committed to the to the education, and we have a very high service model, so the advisors that know us well know that we’re very accessible and always available to them. 

David Kitai  00:08:41 

No, that’s great to hear. And there’s a degree of intentionality behind this, and also that willingness to agitate. And I can just say, as a reporter, I always appreciate being able to talk to someone from Hamilton ETFs when there’s news about the Canadian banks. So thank you for being an open year there. And unfortunately, that is all the time we have today. So all I can really say is thank you both so much, Jennifer and Patrick, for taking the time talking with me and sharing all your insights. And congratulations on your recognition. 

Patrick Somerville  00:09:09 

David, thanks everyone at Wealth Professional. 

Jennifer Mersereau  00:09:12 

Really appreciate it. 

David Kitai  00:09:13 

And thank you to all of our viewers for Wealth Professional, I have been David Kitai, have a great rest of your day.