New ETFs offer U.S. Treasury exposure with active options program for higher yields
TORONTO – September 29, 2023 – 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
|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
|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%|
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:
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.
Contact Horizons ETFs at 1-866-641-5739 (toll-free) or (416) 933-5745
Contact Naseem Husain
Senior Vice President, ETF Strategist
Horizons ETFs Management (Canada) Inc.
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 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.
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.