Horizons ETFs extends Fee Rebate on Horizons S&P/TSX 60™ Index ETF (HXT)

HXT remains amongst the lowest cost investment funds in Canada

TORONTO, Aug. 27, 2014 /CNW/ - Horizons ETFs Management (Canada) Inc. ("Horizons ETFs") is pleased to announce the continuation of a two basis point (or 0.02%) rebate (the "Rebate") on Horizons S&P/TSX 60™ Index ETF's ("HXT") annual management fee.

The Rebate will remain in effect until at least Sept 30, 2015, and during that time the effective annual management fee investors will pay on HXT will be five basis points (or 0.05%), plus applicable sales taxes.

With the Rebate, HXT continues to be Canada's low cost ETF, with fees less than half of any other S&P/TSX 60™ Index ("TSX 60") linked ETF in Canada, and is one of the lowest cost Canadian stock index ETFs in the world.

"Four years after its launch, HXT remains the lowest cost ETF in Canada, tied with two other ETFs that each now have management fees of 0.05%," said Howard Atkinson, President of Horizons ETFs, "I think even more remarkable than maintaining its crown as Canada's lowest-cost ETF, is the fact that HXT has not paid a single taxable distribution. Non-registered investors in HXT have arguably seen an even greater benefit from the tax savings provided by the total return structure than from the cost benefits of its industry-low management fee."  

HXT is the largest, by assets under management, of Horizons' total return swap-based ETFs. This structure allows for lower management fees and greater tax efficiency, where the value of any dividend or income distributions paid out by index constituents is reflected in the total return of the index and therefore in the ETF's net asset value (NAV).  There has not been a single taxable distribution of dividend or income by any of the Horizons total return swap-based ETFs. The total return swap-based ETFs and their respective swaps are managed in a way where Horizons does not anticipate that these ETFs will make any future distributions.

"The sales success of HXT, which is our largest ETF, has helped create greater awareness in Canada about the benefits of the Total Return Swap structure, particularly the tax benefits, which can be substantial if the ETF is held in a non-registered investment account", said Mr. Atkinson. "Index investors have no control over the returns of the market, but by reducing the fees and taxes they pay to get that exposure, they can reliably increase their long term performance."

Horizons currently offers five total return swap based ETFs, including the Horizons Cdn Select Universe Bond ETF, which was launched in April and is the first bond ETF in North America to use a total return swap structure. 

Ticker

ETF Name

Annual Management Fee (%)*

HXT

Horizons S&P/TSX 60™ Index ETF

  0.05 **

HXS

Horizons S&P 500® Index ETF

0.15

HXE

Horizons S&P/TSX Capped Energy Index ETF

0.35

HXF

Horizons S&P/TSX Capped Financials Index ETF

0.35

HBB

Horizons Cdn Select Universe Bond ETF

0.15

plus applicable sales taxes
** includes the rebate of 2bps (0.02%) to an effective management fee of 5bps, or 0.05%, until at least September 30, 2015

HXT, since its launch in 2010, has delivered the total returns of the TSX 60 with minimal tracking error. Since the inception of HXT, its cumulative tracking error to its benchmark index as of July 31, 2014 was only 0.31% and on an annualized basis this equated to 0.06%, roughly the equivalent of its annual management fee, plus applicable sales taxes. This cumulative tracking error is more than 100bps better than any other TSX 60 linked ETF in Canada over the same period.

Tracking error is an often overlooked cost metric which refers to how closely the ETF replicates the performance of its benchmark index. Factors such as management fees, taxes and portfolio trading costs can result in higher tracking error so that the returns of the ETF are noticeably different than the returns of the reference index. Since HXT does not physically hold the underlying constituent stocks of the TSX 60, it does not incur any ancillary portfolio management costs of trading stocks that can result in higher tracking error.

"HXT's tracking error has been as precise as you can reasonably expect an ETF to be and is a great example of its competitive advantages and how well it has reduced investment costs for its unitholders," said Mr. Atkinson.

HXT Performance (as at July 31, 2014)


YTD (%)

1 Year (%)

2 Year (%)

3 Year (%)

Since HXT Inception*** (%)

HXT Cumulative Performance1

14.78

27.40

41.16

31.82

39.39

TSX 60 Cumulative Performance

14.81

27.47

41.32

32.07

39.70

Cumulative Tracking Error

-0.04

-0.07

0.16

-0.25

-0.31







HXT Annualized Performance2

14.78

27.40

18.81

9.64

8.94

TSX 60 Annualized Performance

14.81

27.47

18.88

9.71

9.00

Annualized Tracking Error

-0.04

-0.07

-0.07

-0.07

-0.06

*** Inception as of September 14, 2010

1 The indicated rates of return are cumulative growth total returns including changes in per unit value and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any HXT unitholder that would have reduced returns. These returns are only to illustrate the effects of compounded rates of return and are not intended to reflect future values of HXT or the return on an investment in HXT.

2 The indicated rates of return are historical annual compounded total returns including changes in per unit value and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any HXT unitholder that would have reduced returns.

About Horizons ETFs Management (Canada) Inc. (www.HorizonsETFs.com)

Horizons ETFs Management (Canada) Inc. and its affiliate AlphaPro Management Inc. are innovative financial services companies offering the Horizons ETFs family of exchange-traded funds. The Horizons ETFs family includes a broadly diversified range of investment tools with solutions for investors of all experience levels to meet their investment objectives in a variety of market conditions. Horizons ETFs has more than $4.5 billion of assets under management and with 71 ETFs listed on the Toronto Stock Exchange, the Horizons ETFs family makes up one of the largest families of ETFs in Canada. Horizons ETFs Management (Canada) Inc. and AlphaPro Management Inc. are members of the Mirae Asset Global Investments Group.

Commissions, trailing commissions, management fees and expenses all may be associated with an investment in exchange traded funds. Exchange traded funds are not guaranteed, their values change frequently and past performance may not be repeated. The prospectus contains important detailed information. Please read the prospectus before investing.

Certain statements contained in this news release 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, forward-looking 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. Horizons ETFs 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.

SOURCE: Horizons ETFs Management (Canada) Inc.

For further information: Howard Atkinson, President, Horizons ETFs Management (Canada) Inc., (416) 777-5167, hatkinson@horizonsetfs.com

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