Future Cars
Cyber Security
THEMATICS Gender Diversity
Blockchain
Presented by: Raj Lala, President & CEO, Evolve Funds Group
Disclaimer This presentation is not an offer or solicitation of an offer or a recommendation to buy or sell any securities or financial instrument, nor shall it be deemed to provide investment, tax or accounting advice. The information contained herein is intended as a summary only and is qualified entirely by, and should be read in conjunction with, the more detailed information appearing in the prospectuses dated August 4, 2017, August 14, 2017, February 5, 2018 and March 21, 2018. Commissions, management fees and expenses all may be associated with exchange traded mutual funds (ETFs). Please read the prospectus before investing. ETFs are not guaranteed, their values change frequently and past performance may not be repeated. There are risks involved with investing in ETFs. Please read the prospectus for a complete description of risks relevant to the ETF. Investors may incur customary brokerage commissions in buying or selling ETF units. Certain statements contained in this presentation may constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to a future outlook and anticipated distributions, events or results and may include statements regarding future financial performance. In some cases, forwardlooking information can be identified by terms such as "may", "will", "should", "expect", "anticipate", "believe", "intend" or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Evolve Funds undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law. Bloomberg and Bloomberg.com are trademarks and service marks of Bloomberg Finance L.P., a Delaware limited partnership, or its subsidiaries. All rights reserved.
Invest Better. evolveetfs.com Evolve Funds Group Inc.
| 416.214.4884 | Brookfield Place, 161 Bay Street, Suite 2700, Toronto ON M5J2S1 2
Our Product Suite COMMITTED TO BRINGING INNOVATION TO THE ETF MARKET
Thematics: Canada’s First Cyber Security ETF
Canada’s First Automobile Innovation ETF
Canada’s First Gender Diversity ETF
Actively Managed Marijuana ETF
Canada’s First Actively Managed Blockchain ETF
Income Strategies:
Core Active:
April 3, 2018 - Evolve ETFs Announces Filing of Preliminary Prospectus for the Evolve Innovation Index ETF (Ticker: EDGE). Subject to Canadian securities regulatory approval.
3
Strong Growth in ETFs Canadian ETF Growth Highlights An ETF… • Is structured as a mutual fund • Can be listed and traded on an exchange like a stock • Can be traded intraday, shorted and bought on margin • Generally involves lower costs and better tax efficiency
As at December 31, 2017 Sources: National Bank Financial, Bloomberg
4
Cybercrime costs the global economy over $3 trillion annually. 1
1
The Threat is Real: A Look At the Cybersecurity Opportunity, CIBC Industry Update August 23, 2017
The Case for Cyber Security
#1
$6 trillion
risk facing enterprises today is arguably cybercrime1
the amount predicted to cost the global economy by 20211
Global Cyber Security Opportunity1 120 100
Reducing the cost of security breaches by only 10% can save global enterprises $17 billion annually.2
80
66
72
77
84
90
97
105
113
60 40
The global cybersecurity market is projected to reach $113 billion in 2020
20 0
2013 2014 2015 2016 2017E 2018E 2019E 2020E
7.6% CAGR (Compound Annual Growth Rate) 1 Cybersecurity 2
Ventures, 2017 Edition Morgan Stanley, May 2017
6
7
8
The Explosion of Connectivity
Source: Gartner Research, February 2017
As technology gets more sophisticated, cyber attacks are becoming one of the biggest fears of CEOs.
Source: Lloyd’s, July 2017
Source: Lloyd’s and Cyence, July 2017
9
Cyber Security Investment is on the Rise
Source: Business Insider, Zion, October 2017 Market Research
10
Top 25 Holdings of CYBR NAME
WEIGHT
NAME
WEIGHT
1. Palo Alto Networks Inc.
8.52%
14. Qualys Inc.
2.73%
2. Fortinet Inc.
8.46%
15. Mimecast Limited
2.01%
3. Akamai Technologies Inc.
7.75%
16. CyberArk Software Ltd.
1.75%
4. Trend Micro Inc.
7.41%
17. SailPoint Technologies Holding Inc.
1.72%
5. F5 Networks Inc.
7.28%
18. NEXTDC Ltd
1.47%
6. Check Point Software Technologies Ltd.
6.90%
19. Imperva Inc.
1.45%
7. CSRA Inc.
6.64%
20. ForeScout Technologies Inc.
1.22%
8. Symantec Corporation
6.45%
21. Rapid7 Inc.
1.11%
9. Booz Allen Hamilton Holding Corp
5.62%
22. Radware Ltd
0.92%
10. Proofpoint Inc.
4.99%
23. NIC Inc.
0.87%
11. InterXion Holding
4.37%
24. Switch Inc.
0.56%
12. CACI International Inc.
3.64%
25. Digital Arts Inc.
0.53%
13. FireEye Inc.
3.11% As at March 29, 2018
11
Low Correlation to Traditional Technology Stocks Evolve Cyber Security Index ETF (CAD) NASDAQ 100 Currency Hedged CAD Index (CAD)
2018 Data as at April 5, 2018. Indices are unmanaged and their returns do not include any sales charges or fees. It is not possible to invest directly in market indices. Source: Bloomberg Finance L.P. Commissions, management fees and applicable sales taxes all may be associated with an investment in the exchange traded funds managed by Evolve ETFs (the "ETFs"). The ETFs are not guaranteed, their values change frequently and past performance may not be repeated. The prospectus contains important detailed information about the ETFs. Please read the prospectus before investing. CYBR is not sponsored, promoted, sold or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the Index and/or Index trade name or the Index Price at any time or in any other respect. The Index is calculated and published by Solactive AG. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards the Issuer, Solactive AG has no obligation to point out errors in the Index to third parties including but not limited to investors and/or financial intermediaries of the financial instrument. Neither publication of the Index by Solactive AG nor the licensing of the Index or Index trade name for the purpose of use in connection with the financial instrument constitutes a recommendation by Solactive AG to invest capital in CYBR nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in CYBR. 12
Canada’s First Cyber Security ETF Evolve Cyber Security Index ETF INDICATIVE YIELD2
AVERAGE MARKET CAP
MINIMUM MARKET CAP
NUMBER OF HOLDINGS
0.45%
CAD 6 BILLION
CAD 100 MILLION
31
MANAGEMENT FEE
MANAGEMENT EXPENSE RATIO (MER)
CLASSES
INDEX REBALANCING (MARKET CAP WEIGHT)
0.40%
0.55%
HEDGED & UNHEDGED
QUARTERLY
INDEX METHODOLOGY ▪ ▪
FactSet RBICS: Carrier Edge Network Management Equipment, Network Security Equipment, Data Center Services, Government IT Services, Network Security Software Minimum average daily value traded of CAD $2 million over the preceding 3 months GEOGRAPHIC ALLOCATION Name United States Israel Japan Netherlands Australia
As at March 29, 2018 1 Gross of MER 2 Includes fixed administration fee of 0.15%
Weight 76% 10% 8% 4% 2%
INDUSTRY ALLOCATION Name
Weight
Information Technology Telecommunication Services
98% 2%
13
The auto industry is poised to undergo the biggest transformation in a lifetime.
The Future of the Car is “ACES” Autonomous
Connected
ELECTRIC VEHICLES
Electric
Shared
AUTONOMOUS CRUISE CONTROL ESP SYSTEM
INFOTAINMENT
PRE-CRASH SYSTEM
BRAKE ASSISTING SYSTEM
LANE DEPARTURE WARNING SYSTEM
AIR BAGS 15
Autonomous Vehicles Will Save Lives Safety First
Deaths per million of vehicles
Deaths caused by road accidents, 1995-20153
1 World
Health Organization and the Association for Safe International Road Travel 2015 estimate by mid-century. CB Insights 2017. 3 BlackRock Investment Institute and the OECD, April 2017. Note: The lines indicate the rate of fatalities within 30 days of traffic accidents, with suicides excluded. 2 Researchers
1.3 million the number of traffic fatalities worldwide per year1
90% the number of traffic fatalities that could be reduced with driverless cars2
16
Connection Matters
Connected-car technology will become standard by 2020.
Source: BlackRock, McKinsey, April 2017
17
The Future Car is Electric
90% the percentage of worldwide vehicle production expected to be EVs by 20403
Ford
BMW
Nissan
$11 billion
25
1 million
The amount Ford plans to spend on electric cars1
Electrified models by 20254
The number of electric vehicles Nissan aims to sell by 20225
Volkswagen
Volvo
80
2019
2020
A hybrid or electric will be in every new model4
A hybrid or electric will be in every new model4
New electrified models by 20254
1 Ford
Motor Co. CEO on Jan 14, 2018 Oct 2 2017 3 International Monetary Fund (IMF): Riding the Energy Transition: Oil Beyond 2040 4 Digital Trends October 21, 2017 5 The Globe & Mail, March 2018 2 Fortune.com
Jaguar
Land Rover
Mercedes-Benz
Hyundai
GM
2022
31
20
An electrified version of every model in its lineup4
New ‘eco-friendly’ models by 20204
Electric car models on the road by 20232 18
Top 25 Holdings of CARS NAME
WEIGHT
NAME
WEIGHT
1. Autoliv Inc.
4.32%
14. Silicon Laboratories Inc.
3.45%
2. ams AG
4.19%
15. Integrated Device Technology Inc.
3.44%
3. Maxim Integrated Products Inc.
4.00%
16. Texas Instruments Inc.
3.39%
4. GS Yuasa Corporation
3.81%
17. STMicroelectronics
3.37%
5. Gentherm Incorporated
3.78%
18. Infineon Technologies
3.35%
6. NVIDIA Corporation
3.76%
19. Aptiv
3.33%
7. Ferrari
3.75%
20. Volkswagen
3.32%
8. Skyworks Solutions Inc.
3.73%
21. Ambarella Inc.
3.31%
9. Analog Devices Inc.
3.65%
22. MaxLinear Inc.
3.13%
10. NXP Semiconductors
3.58%
23. Ford Motor Company
3.08%
11. AAC Technologies Holdings Inc.
3.50%
24. General Motors Company
3.05%
12. EnerSys
3.49%
25. Plug Power Inc.
2.92%
13. Hella GmbH & Co KGaA
3.45%
As at March 29, 2018
19
The Transforming Auto Industry Solactive Future Cars Index (CAD) MSCI ACWI Automobiles & Components Index (CAD)
Data as at March 29, 2018. Indices are unmanaged and their returns do not include any sales charges or fees. It is not possible to invest directly in market indices. Source: Bloomberg Finance L.P. Commissions, management fees and applicable sales taxes all may be associated with an investment in the exchange traded funds managed by Evolve ETFs (the "ETFs"). The ETFs are not guaranteed, their values change frequently and past performance may not be repeated. The prospectus contains important detailed information about the ETFs. Please read the prospectus before investing. CARS is not sponsored, promoted, sold or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the Index and/or Index trade name or the Index Price at any time or in any other respect. The Index is calculated and published by Solactive AG. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards the Issuer, Solactive AG has no obligation to point out errors in the Index to third parties including but not limited to investors and/or financial intermediaries of the financial instrument. Neither publication of the Index by Solactive AG nor the licensing of the Index or Index trade name for the purpose of use in connection with the financial instrument constitutes a recommendation by Solactive AG to invest capital in CARS nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in CARS. 20
Canada’s First Automobile Innovation ETF Evolve Automobile Innovation Index ETF INDICATIVE YIELD2
AVERAGE MARKET CAP
MINIMUM MARKET CAP
NUMBER OF HOLDINGS
1.10%
CAD 34 BILLION
CAD 500 MILLION
29
CLASSES
INDEX REBALANCING (EQUAL WEIGHT)
HEDGED, UNHEDGED, AND USD
QUARTERLY
MANAGEMENT FEE
MANAGEMENT EXPENSE RATIO (MER)
0.40%
0.55%
INDEX METHODOLOGY ▪ ▪
FactSet RBICS: Car Manufacturers, Auto Interior Products, Fuel Cell and Technology Providers, Battery Manufacturing, Video Multimedia/Analog Semiconductors Minimum average daily value traded of CAD $5 million over the preceding 3 months
GEOGRAPHIC ALLOCATION
As at March 29, 2018 1 Gross of MER 2 Includes fixed administration fee of 0.15%
Name United States Germany United Kingdom Austria Sweden Japan Italy Netherlands China Switzerland
Weight 57% 10% 6% 4% 4% 4% 4% 4% 4% 3%
INDUSTRY ALLOCATION
Name Information Technology Consumer Discretionary Industrials Consumer Staples Energy
Weight 56% 31% 7% 3% 3%
21
Blockchain is Poised to Disrupt Multiple Industries
22
What is Blockchain? • •
Blockchain technology is software that enables a shared, distributed ledger to be created on a network of computers. A list of records, or blocks, are cryptographically linked to one another via timestamps and other attributes.
Source: PwC, July 2016
23
Blockchain Applications & Disruption
Source: AcceleratingBiz, April 2017 24
Investing in the Evolve Blockchain ETF 1. Active Management ▪ Index investing in emerging sectors may be problematic ▪ Expert stock selection with risk management techniques ▪ Ability to invest in earlier stage companies at strong valuations
2. Global Exposure ▪ Anticipating an increase in global adoption of the blockchain industry ▪ The global market for blockchain is anticipated to reach US $60.7 billion in 2024.* Source: Blockchain: Market Shares, Strategies, and Forecasts, Worldwide 2018-2024, January 2018
3. Privates ▪ May invest up to 10% in unlisted issuers ▪ Participate in pre-IPO and M&A activity 25
Top 10 Holdings NAME
WEIGHT
WEIGHT
NAME
1. Mogo Finance Technology Inc.
6.72%
6. Glance Technologies Inc.
4.86%
2. Hive Blockchain Technologies Ltd
6.48%
7. SAP SE
4.49%
3. BTL Group Ltd.
5.86%
8. Deutsche Boerse
4.46%
4. DMG Blockchain Solutions Inc.
5.56%
9. Banco Bilbao Vizcaya Argentaria SA
4.43%
5. GoldMoney Inc.
5.54%
10. Thomson Reuters Corp
4.43%
Portfolio Constituents
27 Companies; equally weighted (4% each)
=
12 large cap, established leaders in their respective industries • market cap > $1B USD • 48% of portfolio
As at March 29, 2018
+
15 small cap, pure blockchain companies
• market cap < $1B USD • 52% of portfolio holdings 26
Evolve Blockchain ETF Evolve Blockchain ETF NUMBER OF HOLDINGS
MANAGER
CLASSES
27
EVOLVE FUNDS GROUP INC.
LINK (Unhedged)
MANAGEMENT FEE
MANAGEMENT EXPENSE RATIO (MER)
CURRENCY
0.75%
1.00%
CAD
GEOGRAPHIC ALLOCATION Name Canada United States Germany Spain France Finland Ireland As at March 29, 2018 1 Includes fixed administration fee of 0.25%
Weight 52% 22% 9% 5% 4% 4% 4%
INDUSTRY ALLOCATION Name
Weight
Information Technology Financials Consumer Discretionary
65% 29% 6%
27 27
Gender Diversity And Corporate Performance
Gender Diversity and Corporate Performance CS Gender 3000, The Reward for Change (September 2016) Companies that have significant numbers of women in leadership roles have historically outperformed others in terms of return on equity, operating results and stock price growth.
MSCI, The Tipping Point: Women on Boards and Financial Performance (December 2016) Global companies in 2015 with strong female leadership enjoyed 10.1% ROE vs 7.4% ROE for companies without strong female leadership. Morgan Stanley, Quant Team (2016) North American high gender-diverse companies delivered an incremental ROE of ~1% relative to low gender diverse companies over a 3-year horizon; and 2.2% average annualized relative returns vs low gender diverse companies over 5 years.
29
The Importance of Gender Diversity Gender diversity has become important topic for global companies
Gender Diversity
= Corporate Performance Why? • Happier and more productive workforce • Overall better understanding of the end consumer • Organizations tend to have greater transparency and better governance
As at September 2015
Bottomline:
MORE FORWARD THINKING = BETTER PERFORMANCE 30
Equileap North American Gender Equality Index Equileap’s Unique Research Methodology • Fact-based methodology developed to assess companies on their gender equality • Scorecard utilizes 19 gender equality criteria covering four categories: Gender Balance in Leadership & workforce
Commitment to Women’s Empowerment
Equal Compensation & Work-Life Balance
Policies promoting gender equality
Selection Process for Index • Top 150 North American Large Caps - diverse, durable companies through a Gender Lens 3,000 GLOBAL COMPANIES (Equileap Gender Diversity Database) Minimum market cap US$ 2 billion Companies ranked by Equileap Gender Diversity Scorecard
1,000 NORTH AMERICAN COMPANIES
TOP 150 COMPANIES Sorted according to Equileap Gender Diversity Scorecard
TOP 150 COMPANIES Included in the Index, equal weighted 31
Diverse & Durable North American Companies NAME
WEIGHT
NAME
WEIGHT
1. Amazon.com Inc.
1.04%
14. ConocoPhillips
0.82%
2. Jones Lang LaSalle Inc.
0.95%
15. Motorola Solutions Inc.
0.82%
3. Intel Corporation
0.92%
16. ResMed Inc.
0.81%
4. Adobe Systems Inc.
0.91%
17. salesforce.com Inc.
0.81%
5. Estee Lauder Companies Inc.
0.89%
18. Texas Instruments Inc.
0.81%
6. Macy's Inc.
0.87%
19. Bank of America Corporation
0.80%
7. Cisco Systems Inc.
0.87%
20. Caterpillar Inc.
0.80%
8. ON Semiconductor Corporation
0.86%
21. NIKE Inc., Class B
0.80%
9. NVIDIA Corporation
0.86%
22. Xylem Inc.
0.79%
10. Marathon Oil Corporation
0.85%
23. Microsoft Corporation
0.79%
11. Marriott International Inc.
0.84%
24. Workday Inc.
0.79%
12. Verisk Analytics Inc.
0.83%
25. JPMorgan Chase & Co.
0.79%
13. Hess Corporation
0.82%
As at March 29, 2018
32
Gender Diversity and Corporate Performance Overall, companies that have demonstrated a commitment to corporate gender diversity historically outperform against the cumulative performance of major North American companies
Solactive Equileap North American Gender Equality Index NTR (CAD-Hedged)
MSCI North American NTR USD Index (CAD-Hedged)
Data as at March 29, 2018. Indices are unmanaged and their returns do not include any sales charges or fees. It is not possible to invest directly in market indices. Sources: Bloomberg Finance L.P., Solactive Equileap Commissions, management fees and applicable sales taxes all may be associated with an investment in the exchange traded funds managed by Evolve ETFs (the "ETFs"). The ETFs are not guaranteed, their values change frequently and past performance may not be repeated. The prospectus contains important detailed information about the ETFs. Please read the prospectus before investing. Indices are unmanaged and their returns do not include any sales charges or fees. It is not possible to invest directly in market indices. HERS is not sponsored, promoted, sold or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the Index and/or Index trade name or the Index Price at any time or in any other respect. The Index is calculated and published by Solactive AG. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards the Issuer, Solactive AG has no obligation to point out errors in the Index to third parties including but not limited to investors and/or financial intermediaries of the financial instrument. Neither publication of the Index by Solactive AG nor the licensing of the Index or Index trade name for the purpose of use in connection with the financial instrument constitutes a recommendation by Solactive AG to invest capital in HERS nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in HERS. 33
Large Caps with a Gender Lens Evolve North American Gender Diversity Index ETF NUMBER OF HOLDINGS
INDICATIVE YIELD1
AVERAGE MARKET CAP
MINIMUM MARKET CAP
2.35%
USD 72 BILLION
USD 2 BILLION
150
MANAGEMENT FEE
MANAGEMENT EXPENSE RATIO (MER)2
CLASSES
INDEX REBALANCING (EQUAL WEIGHT)
0.40%
0.55%
HEDGED & UNHEDGED
ANNUALLY with Quarterly Reviews
GEOGRAPHIC ALLOCATION Name United States Canada
As at March 29, 2018 1 Gross of MER 2 Includes fixed administration fee of 0.15%
Weight 87% 13%
INDUSTRY ALLOCATION Name Financials Information Technology Consumer Discretionary Industrials Consumer Staples Health Care Energy Materials Real Estate Utilities Telecommunication Services Other
Weight 16% 16% 14% 10% 9% 9% 7% 6% 5% 4% 3% 1%
34
Robotics & Automation
Cloud Computing & Big Data
COMING SOON: Future Cars
Genomics
Ticker: EDGE
Blockchain
Alternative & Renewable Energy
Social Media
Portfolio Positioning
36
MARKETING RESOURCES Quarterly Calls & Webinars
Infographics, Videos & Podcasts Newsletters
Press & Media Factsheets
Monthly Commentaries 37
THANK YOU
Invest Better. evolveetfs.com Bloomberg and Bloomberg.com are trademarks and service marks of Bloomberg Finance L.P., a Delaware limited partnership, or its subsidiaries. All rights reserved.