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Horizons ETFs Announces Closure of Two Volatility-Focused ETFs

TORONTO – April 10, 2018 – Horizons ETFs Management (Canada) Inc. (the “Manager”) announced today that it will be terminating the BetaPro S&P 500 VIX Short-Term Futures™ 2X Daily Bull ETF (HVU) and the BetaPro S&P 500 VIX Short-Term Futures™ Daily Inverse ETF (HVI) (collectively, the “ETFs”) effective at the close of business on Monday, June 11, 2018 (the “Termination Date”). Details of the ETFs are as follows:

ETF Name Class of Units Ticker
BetaPro S&P 500 VIX Short-Term Futures™ 2X Daily Bull ETF Class A HVU
BetaPro S&P 500 VIX Short-Term Futures™ Daily Inverse ETF Class A HVI

 

Effective immediately, no further direct subscriptions for units of the ETFs will be accepted. Tuesday, June 5, 2018, is expected to be the last date on which a redemption request may be placed with the Manager, and the ETFs are expected to be de-listed from the Toronto Stock Exchange, at the request of the Manager, at the close of business on or about Wednesday, June 6, 2018, with all units still held by investors being subject to a mandatory redemption as of the Termination Date.

Since early February of this year, the pricing in S&P 500 VIX futures has been very irrational and erratic. This volatility, in the case of HVI and HVU, has, in the Manager’s view, significantly changed the risk profile of these two ETFs to be far too high for Canadian investors.

Horizons ETFs is of the opinion that ETFs that provide exposure that are expected to generate returns that are greater than, or inverse to, one-times the daily price return of volatility futures specifically no longer offer an acceptable risk/reward trade-off for Canadian investors.

After reassessing the performance of HVU and HVI, particularly their respective performance following the first week of February, when volatility futures contracts spiked by more than 100% during one 24-hour trading period, we have come to the conclusion that these ETFs no longer offer an acceptable risk/reward trade-off for investors,” said Steve Hawkins, President and Co-CEO of Horizons ETFs. “We are an asset manager that generates revenue from management fees on our products, so our goals are, and have always been, aligned with those of our ETF investors: we want our investors to generate positive returns. Ultimately, we do not want to be offering investment products that have the potential to lose the majority of an investor’s capital in such a short period of time.

Horizons ETFs is the only provider of leveraged ETFs in Canada. Leveraged ETFs are designed to provide double the daily exposure (either long or short) to a commodity, benchmark or index. They seek to deliver two times (2X) the daily return (either on the upside or downside) before fees and expenses of that commodity, benchmark or index. Inverse ETFs aim to achieve the inverse (opposite) (-1X) of the daily performance of their respective underlying benchmark before fees and expenses. Horizons ETFs believes there is a reasonable and transparent amount of daily market risk with all of its other BetaProbranded ETFs, including the BetaPro S&P 500 VIX Short-Term Futures™ ETF (HUV), which offers single-long (1x) daily exposure to the same underlying index as HVU and HVI. HUV will continue to be listed on the Toronto Stock Exchange and will continue to provide a method for investors to get exposure to S&P 500 VIX Futures contracts.

We continue to stand by our remaining line-up of BetaPro ETFs as a way for tactically-focused shortterm investors to profit or protect their portfolios from market activity,” said Mr. Hawkins. “We’ve always been very upfront that our line-up of BetaPro ETFs, which offer both leveraged and inverse leveraged exposure to a multitude of equity and commodity benchmarks, is for short-term, highconviction investors who have a substantial amount of investment knowledge and risk tolerance. With these ETFs comes the opportunity to use leveraged ETFs to potentially generate daily excess returns from short-term changes in an asset class. In the specific case of leverage and inverse exposure to volatility futures, we now feel the potential risk of loss simply exceeds the potential reward.

Any remaining unitholders of the ETF as at the Termination Date will receive the net proceeds from the liquidation of the assets, less all liabilities and all expenses incurred in connection with the dissolution of the ETF, on a pro-rata basis.

About Horizons ETFs Management (Canada) Inc.
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 suite 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 approximately $10 billion of assets under management and 81 ETFs listed on major Canadian stock exchanges. Horizons ETFs Management (Canada) Inc. is a member of the Mirae Asset Global Investments Group.

For further information:
Mark Noble, Senior Vice-President and Head of Sales Strategy
Phone: (416) 640-8254
Email: mnoble@horizonsetfs.com

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