New ETF provides low-cost and tax-efficient exposure to U.S. mid-term treasuries
TORONTO, April 7, 2015 /CNW/ - Horizons ETFs Management (Canada) Inc. ("Horizons ETFs") is pleased to announce the launch of the Horizons US 7-10 Year Treasury Bond ETF ("HTB"), which will provide investors with low-cost and tax-efficient exposure to the U.S. mid-term treasuries market.
Units of the ETF will begin trading tomorrow on the Toronto Stock Exchange ("TSX") in Canadian dollars under the ticker symbol "HTB" and in U.S. dollars under the ticker symbol "HTB.U".
HTB seeks to replicate, to the extent possible, the performance of the Solactive US 7-10 Year Treasury Bond Index (Total Return), net of expenses. The Solactive US 7-10 Year Treasury Bond Index is a rules-based index designed to measure the performance of the US 7-10 Year Treasury Bond market.
HTB is the second fixed income exchange traded fund ("ETF") in Canada to use Horizons ETFs' innovative total return swap ("TRS") structure following last year's launch of the Horizons Cdn Select Universe Bond ETF ("HBB"). HBB, and now HTB, are both a part of Horizons ETFs' benchmark suite of low-cost TRS based ETFs, which also include the Horizons S&P/TSX 60™ Index ETF ("HXT") and the Horizons S&P 500® Index ETF ("HXS"). As demonstrated by HBB, HXT and HXS since they launched, the TRS structure reduces the risk of tracking error for ETFs which can arise when seeking to physically replicate an index. Additionally, our suite of TRS-based ETFs have never made a distribution, validating their tax efficiency for unitholders.
U.S. treasury bonds are among the most liquid assets in the world, representing US$12.5 trillion in assets in North America (Source: Bloomberg, as at Feb. 1, 2015). HTB will help investors gain access to the mid-term portion of this market, which offers a compelling trade-off between interest rate risk and yield for many investors. Typically, mid-term treasuries offer higher yields than short-term bonds (under five years), but have lower interest-rate risk than longer-term bonds (with time horizons greater than 10 years).
"In a low interest rate environment, such as this one, taxes charged on interest income from bonds will erode returns," says Howard Atkinson, President of Horizons ETFs Management (Canada) Inc. "However, by using a TRS structure, as HTB and HBB do, investors in non-registered accounts can ensure they are receiving the total compounded return of the underlying bond index, without the usual tax consequences that can occur from investing in this asset class directly."
The Solactive US 7-10 Year Treasury Bond Index was developed and is calculated by Solactive, one of the world's fastest growing index providers, which, as of December 31, 2014, has approximately US$25 billion amongst 170 ETFs benchmarked to its indices.
HTB has closed the offering of its initial units and it will begin trading on the TSX when the market opens in the morning.
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 $4.9 billion of assets under management and with 70 ETFs listed on the Toronto Stock Exchange (as at March 31, 2015), 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.
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Horizons ETFs is a member of Mirae Asset Global Investments. Commissions, management fees and applicable sales taxes all may be associated with an investment in the exchange traded funds managed by Horizons ETFs Management (Canada) Inc. (the "ETFs"). The ETFs are not guaranteed, their values change frequently and past performance may not be repeated. The prospectus contains important detailed information about the ETFs. 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, [email protected]