Ninepoint Shrugs Off Political Rhetoric to Launch ETF Focusing on Energy Interdependence of US and Canada

 

Canadian asset manager Ninepoint Capital is challenging economic nationalism in both the United States and Canada and the growing trade war between them by launching on Tuesday an exchange-traded fund that will emphasize the energy interdependence of the two countries.

The Ninepoint North American Energy Independence ETF is the Toronto-based company’s first fund to be listed in the United States and is designed to offer cross-border exposure to an investment theme that Ninepoint co-CEO John Wilson said pre-dated and will outlast any individual political leader.

“It would be naive to think that the headline stuff is going away any time in the next two years,” said Wilson. On the other hand, it is short-sighted to overlook the extent to which the energy industries in both countries already are intertwined, at a time when the AI boom is fueling demand for more and more reliable sources of power, he added. That translates to heightened demand for everything from natural gas and uranium (to fuel nuclear power reactors) to strategic minerals like nickel used in battery manufacturing.

Already, more than 90% of Canadian crude oil exports are destined for the US markets, according to the Canada Energy Regulator, with many US refineries being heavily dependent on Canadian heavy crude. Approximately 85% of all Canadian energy production is exported, the CER said.

But Canada has also been working to diversify its energy exports through a burgeoning LNG sector that targets Asian buyers as well as through the Trans Mountain oil pipeline, which ships Canadian heavy oil off the British Columbia west coast for export overseas.

That is not going to dramatically alter the overall degree of integration in the immediate future, Wilson notes. The need for reliable “friendly” sources of crude oil has been underscored by the conflict with Iran and the resultant near-total shutdown of crucial Strait of Hormuz oil shipping lanes. Meanwhile, data centers required by AI hyperscalers are going to demand more electrical power, much of which will be generated using natural gas.

“Technology may have become a major part of the market, but a lot of the technologies wouldn’t exist to invest in if it weren’t for supplies of Canadian raw materials,” Wilson added.

The new ETF will invest in up to 50 stocks traded in the US, Canada and, eventually, Mexico, with the precise balance being determined by the opportunity set. About two-thirds of the oil and gas producers in which it will invest will be based in the US, Wilson calculates, while Canadian pipeline companies and mining enterprises that produce uranium, copper and other metals needed to electrify the North American economy will make up a majority of those asset classes.

Ninepoint has several other Canadian-traded ETFs, offering straightforward equity portfolios and options-based products. Its other funds include private credit offerings, which in recent years have grappled with funding crunches that required Ninepoint to suspend redemptions. Wilson said Ninepoint replaced cash distributions with additional units to support liquidity and value for investors and that to date, those funds have paid out about $225 million in redemptions.

(Reporting by Suzanne McGee in Providence, Rhode Island; editing by Colin Barr and Lincoln Feast.)

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