New ETF provides low-cost, tax-efficient exposure to NASDAQ-100® Index
TORONTO, April 20, 2016 — Horizons ETFs Management (Canada) Inc. (“Horizons ETFs”) is pleased to announce the launch of the Horizons NASDAQ-100® Index ETF (“HXQ”), which will provide investors with low-cost, tax-efficient exposure to 100 of the largest U.S. and international non-financial companies listed on The NASDAQ Stock Market.
HXQ seeks to replicate, to the extent possible, the performance of the NASDAQ-100® Index (Total Return) – “The Index” – net of expenses, and can be purchased or sold in both Canadian and U.S. dollars. HXQ uses Horizons ETFs’ innovative total return index (“TRI”) structure to provide tax-efficient exposure to the NASDAQ-100® , in U.S. dollar terms.
TRI ETFs are low-cost, index-replicating ETFs that use a synthetic replication structure to receive the pre-tax total return of an index. Unlike physically-replicated ETFs, no distributions are expected to be paid by the ETF; this leads to greater tax efficiency for investors who hold the ETF in non-registered investment accounts. Instead, the value of the dividend or interest income is directly reflected in the performance of the ETF. In addition, tracking error is also reduced in TRI ETFs since there are no portfolio trading costs.
“The NASDAQ-100 is an investor’s main index for exposure to some of the world’s largest and most well-known brand names, like Apple, Facebook, Google and Microsoft,” says Steve Hawkins, Co-CEO, Horizons ETFs. “Using our innovative TRI structure, HXQ investors can now receive the total return of these important growth stocks. This creates the potential for greater compounded after-tax returns versus other NASDAQ-100 ETFs, as HXQ is not exposed to the same withholding taxes for holding the index constituents directly.”
HXQ has closed its initial offering of units and will begin trading on the TSX when the market opens this morning.