Madison Investments launches two ETFs on TSX

Madison Investments, a privately held firm based in Wisconsin, has launched two actively managed exchange-traded funds on the Toronto Stock Exchange: Madison US Mid Cap ETF (TSX: MMID) and Madison US Large Cap ETF (TSX: MLRG). The funds bring the firm’s U.S.-style active equity strategies to Canadian investors in an ETF format.

The company was founded 51 years ago and manages about USD 28 billion across separately managed accounts, mutual funds and active ETFs. Madison has worked with RBC as a distribution partner for more than a decade in Canada and for over 20 years in the U.S., managing roughly USD 3.5 billion for RBC platforms — about USD 2.1 billion in the U.S. and USD 1.5 billion in Canada.

Madison created the new ETFs to broaden its existing product lineup and to support its intermediary distribution business. The firm identified tax advantages of Canadian ETF structures, intraday trading liquidity and portfolio diversification as factors driving investor interest in active ETFs.

Portfolio manager and head of Mid Cap & Large Cap Equity Haruki Toyama stated the funds are built from “intense fundamental research” and aim to provide exposure to high-quality companies with durable growth characteristics at reasonable valuations.

Steven Carl, chair of Madison’s executive committee, described the launches as “an important milestone” for the firm and highlighted an operational advantage of private ownership, saying the firm is not “beholden to the next quarter’s earnings per share so we can take our time making a decision.” He also said the firm expects growth in the Canadian ETF market to be steady and that the expansion will require patience and a long-term commitment.

Madison is considering additional active ETF launches on both the New York Stock Exchange and the Toronto Stock Exchange. The firm has presented its independent, boutique status as a point of distinction in a market with large incumbent issuers.