The evolution of ETF analytics
This Partner Report from TMX explores “ETF first” analytics platform TMX LOGICLY
Emily Choi, Director of Advanced Analytics at TMX Group Limited, explains how analytics platform TMX LOGICLY* informs investment decision-making and helps advisors with client-focused reforms.
Analytics that put ETFs first
Exchange-traded funds (ETFs) attracted record inflows of $53 billion in 2021 (1), a 27% increase from 2020, and the first quarter of 2022 saw inflows of $5.0 billion in January 2022 (2), $3.9 billion in February 2022 (3), and $4.8 billion in March 2022 (4). Yet, despite their sustained popularity, ETFs tend not to be prioritized within portfolio analytics solutions.
TMX LOGICLY aims to change that, says Emily Choi, Director of Advanced Analytics at TMX. Launched by TMX in March 2021, TMX Logicly is an analytics platform that streamlines investment research, asset allocation, portfolio construction, client reporting within one unified, cost-effective system for financial advisors, portfolio managers, and research teams.
“Most vendor solutions try to fit ETFs into the mutual fund mould,” says Choi. “TMX LOGICLY puts ETFs first and also supports mutual funds and segregated funds.”
Choi emphasizes that wealth management professionals don’t simply need more data and analytics. What they really need is the right data and analytics embedded into tools they've already been using for other parts of their work. In addition, they need solutions that recognize that ETFs trade very differently from mutual funds—so, to be useful, analytics must address ETF-relevant variables such as spreads and liquidity.
“We really make an effort to distill that data in a meaningful way to inform the decision-making process. For example, instead of just showing one static risk rating for a fund, we’ll show risk over time as it evolves and how it changes with respect to market movement. It’s a richer data set [because] there isn’t just a data field; there’s a chart that contextualizes information.…It’s not just looking at one thing in isolation.”
Leveraging AI
Artificial intelligence (AI) is embedded into TMX LOGICLY to help advisors optimize ETF portfolios.
“AI can be applied in so many different ways. We’re using it as part of the investment research & evaluation process,” says Choi. “Advisors can research similar funds and compare recent performance or yield. They can also research new investments and model how it would impact their portfolios.”
TMX LOGICLY proposes relevant alternatives from a universe of more than 1,000 ETFs and 24,000 mutual funds. It also monitors portfolios in the background and alerts advisors if a security’s risk profile changes or as markets shift.
At the same time, the platform’s technology provides advisors with another data point for navigating client-focused reforms, including KYC and Know Your Product obligations. Specifically, TMX LOGICLY provides comprehensive client reports and automatic documentation of the investment decision-making process.
Related to that, TMX was among seven applicants selected to participate in OSC TestLab’s Spring 2022 Test to demonstrate “making product information more accessible” and “improving information sharing and enhancing client interactions.” Advisors and firms can sign up to put the platform through its paces by running a range of commonly performed tasks and comparing the results against manual processes.
Overall, what excites Choi most about TMX LOGICLY is that it has the potential to drive a better investment decision making process.
“We believe better data and analytics levels the playing field for advisors and their clients and helps TMX achieve our overarching goal of growing the investment ecosystem.”
Source: National Bank Financial Inc., January 6, 2022, https://cetfa.ca/files/Research/National%20Bank%20December%20Canada.pdf.
Source: National Bank Financial Inc., February 3, 2022, https://cetfa.ca/files/Statistics/January%20-%20Canada.pdf.
Source: National Bank Financial Inc., March 2, 2022, https://cetfa.ca/files/Statistics/February%20-%20Canada%202022.pdf.
Source: National Bank Financial Inc., April 4, 2022, https://cetfa.ca/files/Statistics/March%20-%20Canada%202022.pdf
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