TORONTO, April 3, 2012 /CNW/ - Horizons Exchange Traded Funds Inc. ("Horizons ETFs") and its parent Horizons ETFs Management (Canada) Inc. are pleased to announce the launch of the Horizons BetaPro S&P 500 VIX Short-Term Futures™ Inverse ETF ("HVI"). HVI will begin trading tomorrow on the Toronto Stock Exchange ("TSX") under the ticker symbol HVI.
HVI is designed to provide daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to the single inverse (opposite) of the daily performance of the S&P 500 VIX Short-Term Futures™ Index (the "S&P VIX S-T Index").
Any U.S. dollar gains or losses as a result of HVI's investment will be hedged back to the Canadian dollar to the best of its ability. HVI does not seek to achieve its stated investment objective over a period of time greater than one day.
HVI is the first Canadian ETF that offers investors the opportunity to profit from a decline in a volatility index. Investors cannot gain direct exposure to the Chicago Board of Exchange's Volatility Index (the "VIX Index"), which is commonly used as a measure of the U.S. equity market's implied volatility. The S&P VIX S-T Index is a volatility index that is comprised of first and second month futures contracts that are based on the VIX Index (the "VIX Futures"), with the price of the VIX Futures reflecting the market's expectation of future volatility. The S&P VIX S-T Index methodology is available on the Horizons ETFs website (www.horizonsetfs.com).
"Many investors may only think about investing in volatility when they expect it to rise," said Howard Atkinson, CEO of Horizons ETFs. "Historically, volatility tends to rise dramatically over short periods of time and then taper off. Investors can potentially benefit from investing in declining volatility when the S&P 500 VIX Short-Term Futures Index™ has been trading above its historical range and starts to decline."
HVI joins two other volatility index exchange traded funds offered by Horizons ETFs. In November 2010, Horizons launched the single exposure Horizons BetaPro S&P 500 VIX Short-Term Futures™ ETF ("HUV") and the two-times leveraged exposure Horizons BetaPro S&P 500 VIX Short-Term Futures™ Bull Plus ETF ("HVU" and together with HUV and HVI the "ETFs").
"We are really happy to be able to round out our suite of volatility index ETFs with an inverse ETF," said Mr. Atkinson. "HVI fits with our goal of being able to provide investment solutions for all market conditions, so no matter which way investors think volatility is heading, we have a volatility index ETF that they could use to potentially profit in, or protect, their portfolio."
Commissions, management fees and expenses all may be associated with investments in the ETFs. The ETFs are not guaranteed, their value will change frequently and past performance may not be repeated.
The ETFs are speculative investment tools, are very different from other Canadian exchange-traded funds, and can be used for diversification or as a partial hedge against market conditions.
These are not conventional investments. The ETFs are designed to provide investment results that endeavour to correspond to the performance of, two times the daily performance of, or one times the inverse (opposite) of, the daily performance of the S&P VIX S-T Index. The S&P VIX S-T Index tracks the implied market volatility, not market returns and has tended to have a low to negative correlation to equity market returns. The S&P VIX S-T Index is highly volatile. As a result, it is not generally viewed as a stand-alone long term investment.
Historically, the S&P VIX S-T Index has tended to revert to a historical mean. As a result, the performance of the S&P VIX S-T Index is expected to be negative over the longer term and none of HUV, HVU or the S&P VIX S-T Index are expected to have positive long term performance.
Historically, the S&P VIX S-T Index has experienced significant one day increases when equity markets have had large negative returns which, if repeated, could cause HVI to suffer substantial losses.
Investors should monitor their investment in an ETF daily. Please read the prospectus before investing.
HVI has closed the offering of its initial units which will begin trading tomorrow on the TSX when the market opens.
About Horizons Exchange Traded Funds Inc. (www.horizonsetfs.com)
Horizons ETFs is an innovative financial services company offering the Horizons ETFs family of ETFs. 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. With more than $3.3 billion in assets under management and 83 ETFs listed on the TSX, the Horizons ETFs family makes up one of the largest families of ETFs in Canada. Horizons ETFs is a subsidiary of Horizons ETFs Management (Canada) Inc. and a member of the Mirae Asset Financial Group.
For further information:
Howard Atkinson, CEO, Horizons Exchange Traded Funds Inc., (416) 777-5167 [email protected].