New ETFs offer U.S. Treasury exposure with active options
program for higher yields
TORONTO, Oct. 2, 2023
/CNW/ - Horizons ETFs Management (Canada) Inc. ("Horizons ETFs" or the
"Manager") is pleased to announce that it is launching three
new ETFs (the "ETFs") as part of its Premium Yield suite
(the "Premium Yield Suite") – a unique ETF family that uses
an actively-managed options program with varied levels of duration
that seeks to generate higher yields and may offer tax-efficient
distributions on U.S. Treasury securities.
"With our upcoming Premium Yield Suite, we'll provide an
opportunity for portfolio security in the search for significant
yield," said Rohit Mehta,
President and CEO of Horizons ETFs. "With an underlying
portfolio of U.S. Treasury securities backed by the credit of the
U.S. government coupled with an actively managed options program
driven by our expertise in the field, our Premium Yield ETFs will
seek to offer peace of mind and meaningful monthly income for
investors."
Units of the ETFs have been conditionally approved for listing
by the Toronto Stock Exchange ("TSX") and are slated to
begin trading on October 5, 2023. The
ETFs will be offered in both Canadian dollar and U.S. dollar
versions and are further described in the table below:
|
ETF Name and
Ticker
|
Investment
Objective
|
Target
Duration
|
Mgmt
Fee*
|
Initial Target
Annualized
Net Yield¹
|
|
Horizons Short-
Term U.S.
Treasury
Premium Yield
ETF ("SPAY.U"
and "SPAY")
|
SPAY.U seeks to
provide: (a) exposure to the
performance of a portfolio of U.S. Treasury
securities, generally targeting a duration less than 3
years; and (b) high monthly distributions of interest
income and option premiums. To generate
premiums and reduce volatility, SPAY.U will employ
a dynamic option program.
|
Less than
3 years
|
0.35 %
|
7.5 %
|
|
Horizons Mid-
Term U.S.
Treasury
Premium Yield
ETF ("MPAY.U"
and "MPAY")
|
MPAY.U seeks to
provide: (a) exposure to the
performance of a portfolio of U.S. Treasury
securities, generally targeting a duration between 5
and 10 years; and (b) high monthly distributions of
interest income and option premiums. To generate
premiums and reduce volatility, MPAY.U will
employ a dynamic option program
|
5 to 10
Years
|
0.40 %
|
9.0 %
|
|
Horizons
Long-
Term U.S.
Treasury
Premium Yield
ETF("LPAY.U"
and "LPAY")
|
LPAY.U seeks to
provide: (a) exposure to the
performance of a portfolio of U.S. Treasury
securities, generally targeting a duration over 10
years; and (b) high monthly distributions of interest
income and option premiums. To generate
premiums and reduce volatility, LPAY.U will employ
a dynamic option program.
|
10+
Years
|
0.45 %
|
10.5 %
|
*Plus applicable sales tax
Horizons ETFs' Premium Yield Suite offers Canadians the ability
to choose their duration exposure with U.S. Treasuries and an
actively-managed options program: short or less than 3 years via
SPAY, medium or 5 to 10 years via MPAY, and long or 10+ years via
LPAY.
As part of its options writing program for the ETFs, the Manager
will use both puts and calls to reduce downside risk and improve
upside capture, based on market conditions. This strategy aims to
balance target duration and income potential across interest rate
and interest rate volatility environments. The use of both puts and
calls on a U.S. Treasuries portfolio offers greater flexibility and
adaptability through all market conditions.
"Whether you're cautious about the current interest rate
environment or believe that there's an opportunity to take
advantage of the recent pause in the hiking cycle, our Premium
Yield Suite will offer a duration and yield that can work for you
and your monthly income needs," said Mr. Mehta. "And with
the premiums generated from option writing expected to be treated
as capital gains, these ETFs could offer tax-efficient yield
enhancement to your portfolio, too."
The ETFs are expected to close their initial offering of units
to their designated broker on October 4,
2023, and are expected to begin trading when the market
opens on October 5, 2023.
For further information about the ETFs ahead of launch, please
visit:
SPAY.U: www.HorizonsETFs.com/SPAY
MPAY.U: www.HorizonsETFs.com/MPAY
LPAY.U: www.HorizonsETFs.com/LPAY
About Horizons ETFs Management
(Canada) Inc.
(www.HorizonsETFs.com)
Horizons ETFs Management (Canada) Inc. is an innovative financial
services company with 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
currently has more than $27 billion
of assets under management and 110 ETFs listed on major Canadian
stock exchanges. Horizons ETFs is a wholly owned subsidiary of the
Mirae Asset Financial Group, which manages approximately
$710 billion of assets across 13
countries around the world.
1The amount of the monthly distributions of an
ETF, and therefore the initial targeted annualized net yield and
the ongoing annualized net yield of an ETF, may fluctuate based on
market conditions. There can be no assurance that an ETF will make
any distribution in any particular period or periods. The Manager
may, in its complete discretion, change the frequency of these
distributions, and any such change will be announced by press
release.
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 value changes frequently and past performance may
not be repeated. Certain Horizons Exchange Traded Products may have
exposure to leveraged investment techniques that magnify gains and
losses and which may result in greater volatility in value and
could be subject to aggressive investment risk and price volatility
risk. Such risks are described in the prospectus. The prospectus
contains important detailed information about the Horizons Exchange
Traded Products. Please read the relevant prospectus before
investing.
Certain statements may constitute a forward-looking
statement, including those identified by the expression "expect"
and similar expressions (including grammatical variations thereof).
The forward-looking statements are not historical facts but reflect
the author's current expectations regarding future results or
events. These forward-looking statements are subject to a number of
risks and uncertainties that could cause actual results or events
to differ materially from current expectations. These and other
factors should be considered carefully and readers should not place
undue reliance on such forward-looking statements. These
forward-looking statements are made as of the date hereof and the
authors do not undertake to update any forward-looking statement
that is contained herein, whether as a result of new information,
future events or otherwise, unless required by applicable
law.
This communication is intended for informational purposes
only and does not constitute an offer to sell or the solicitation
of an offer to purchase exchange traded products (the "Horizons
Exchange Traded Products") managed by Horizons ETFs Management
(Canada) Inc. and is not, and
should not be construed as, investment, tax, legal or accounting
advice, and should not be relied upon in that regard. Individuals
should seek the advice of professionals, as appropriate, regarding
any particular investment. Investors should consult their
professional advisors prior to implementing any changes to their
investment strategies. These investments may not be suitable to the
circumstances of an investor.
SOURCE Horizons ETFs Management (Canada) Inc.