The ETFs will be the first in Canada with a direct management fee of
0.00%
TORONTO, Aug. 2, 2018 /CNW/ - Horizons ETFs Management
(Canada) Inc. ("Horizons
ETFs") is launching Canada's
first 0% management fee exchange traded funds ("ETFs") as
part of its innovative suite of Total Return Index ("TRI")
ETFs: the Horizons Conservative TRI ETF Portfolio ("HCON")
and the Horizons Balanced TRI ETF Portfolio ("HBAL"). Units
of the ETFs will trade on the Toronto Stock Exchange
("TSX"), respectively under the ticker symbols HCON and
HBAL, commencing today.
Horizons ETFs' suite of TRI ETFs use an innovative total return
swap investment structure designed to deliver returns in a low-cost
and tax-efficient manner. HCON and HBAL, which invest exclusively
in Horizons TRI ETFs, provide access to the TRI advantage, but now
with no direct management fees or operating costs – a first for any
ETF product in Canada.
Both HCON and HBAL employ an asset allocation strategy that is
rebalanced semi-annually by the Horizons ETFs' portfolio management
team.
Horizons Conservative TRI ETF Portfolio: HCON seeks
moderate long-term capital growth using a conservative portfolio of
exchange traded funds. The portfolio targets a long-term asset
allocation of approximately 50% equity securities and 50% fixed
income securities at the time of any rebalance, and the portfolio
will be rebalanced semi-annually in order to seek a consistent
conservative level of risk.
Horizons Balanced TRI ETF Portfolio: HBAL seeks
long-term capital growth using a balanced portfolio of exchange
traded funds. The portfolio targets a long-term asset allocation of
approximately 70% equity securities and 30% fixed income securities
at the time of any rebalance, and the portfolio will be rebalanced
semi-annually in order to seek a consistent balanced level of
risk.
"With approximately 600 ETF listings in Canada, one of the challenges for investors is
figuring out how to put them all together. One area where the
mutual fund industry has had success relative to the ETF industry
is its ability to offer pre-packaged portfolio solutions and
balanced funds," said Steve
Hawkins, President and Co-CEO of Horizons ETFs. "HCON and
HBAL are one-ticket investment solutions offering investment
strategies that provide exposure to equity and fixed income
securities, but in a low-cost and tax-efficient ETF
structure."
Investors are not subject to any topline management
fees or operating costs by HCON and HBAL. The ETF therefore has
a management fee of 0.00%. However, unitholders still indirectly
pay the management fees on the underlying Horizons TRI ETFs
invested in by HCON and HBAL, which will determine what the
Management Expense Ratio (MER) is for HCON and HBAL.
Based on the initial portfolios of Horizons TRI ETFs held by
HCON and HBAL, the total MER of the portfolios of Horizons
TRI ETFs held by HCON and HBAL will initially be 0.15% and 0.16%,
respectively, and will not exceed 0.17% and 0.18%, respectively, as
at any rebalance.
Based on the initial portfolios of Horizons TRI ETFs held by
HCON and HBAL, the aggregate underlying trading expense ratios of
the portfolios of Horizons TRI ETFs held by HCON and HBAL are
expected to be 0.18% and 0.20%, respectively. As trading expense
ratios include expenses outside of the control of the manager, the
trading expense ratios of the Horizons TRI ETFs held by HCON and
HBAL are subject to change.
"HCON and HBAL are very low-cost ETF solutions, and the only
ETFs in Canada that do not charge
unitholders a topline management fee or any operating costs. The
management fee for both HCON and HBAL is 0.00%," said Mr.
Hawkins. "Since these ETFs will own other Horizons ETFs, there
are still fees indirectly charged by the underlying ETFs held in
the portfolio. All-in, these new portfolio solutions are still very
low-cost by ETF industry standards."
While low management fees are a significant advantage of ETF
investing, HCON and HBAL may offer significant tax benefits as well
if they are held in a taxable account, since they only invest in
TRI ETFs which are designed to enhance the after-tax performance
benefits of the ETF.
Unlike physically replicated ETFs, no dividend or interest
income distributions are expected to be paid by the underlying ETFs
in HCON and HBAL's portfolios. Instead, the value of any dividend
or interest income is directly reflected in the net asset value of
the underlying ETFs.
"Since these are ETF portfolios, there could still be some
taxable distributions when the HCON and HBAL ETFs rebalance, but
overall, these ETFs should be much more tax-efficient than other
ETF portfolio solutions since the underlying ETFs held in the
portfolio are not expected to make any dividend or interest income
distributions," said Mr. Hawkins.
HCON and HBAL have closed their initial offering of units and
will begin trading today on the TSX when the market opens this
morning.
About Horizons ETFs Management (Canada) Inc. (www.HorizonsETFs.com)
Horizons ETFs Management (Canada) Inc. is an innovative financial
services company and offers one of the largest suites of exchange
traded funds in Canada. The
Horizons ETFs product family includes a broadly diversified range
of solutions for investors of all experience levels to meet their
investment objectives in a variety of market conditions. Horizons
ETFs has more than $10 billion of
assets under management and 82 ETFs listed on major Canadian stock
exchanges. Horizons ETFs Management (Canada) Inc. is a member of the Mirae Asset
Global Investments Group.
Horizons ETFs is a Member of Mirae Asset Global Investments.
Commissions, management fees and expenses all may be associated
with an investment in exchange traded products managed by Horizons
ETFs Management (Canada) Inc. (the
"Horizons Exchange Traded Products"). The Horizons Exchange Traded
Products are not guaranteed, their values change frequently and
past performance may not be repeated. The prospectus contains
important detailed information about the Horizons Exchange Traded
Products. Please read the relevant prospectus before
investing.
SOURCE Horizons ETFs Management (Canada) Inc.
