Three new ETFs offer U.S. Treasury exposure, while an actively-managed options program provides investors a unique opportunity to generate stable and higher yields
TORONTO – October 5, 2023 – Horizons ETFs Management (Canada) Inc. (“Horizons ETFs” or the “Manager”) is pleased to announce that its Premium Yield Suite (the “Premium Yield Suite”) of three new ETFs has begun trading today on the Toronto Stock Exchange (“TSX”) under the symbols SPAY.U, MPAY.U, and LPAY.U.
“As generating yield remains a top priority for investors, our Premium Yield Suite offers a range of solutions that have been thoughtfully designed that seek to satisfy the investment objectives of income-seeking investors,” said Rohit Mehta, President and CEO of Horizons. “Our latest ETFs seek to offer short, medium or long-term duration exposure to a portfolio of U.S. treasury securities – while leveraging Horizons ETFs’ expertise in option-writing to seek to help manage downside risk and enable opportunities for greater upside capture.”
Horizons ETFs’ Premium Yield Suite empowers Canadians to tailor their duration exposure to U.S. treasuries in a way that fits with their unique income needs and investment objectives: short (less than 3 years) via SPAY.U, medium (5 to 10 years) via MPAY.U, and long (10+ years) via LPAY.U. Targeted duration to U.S. government-backed securities seek to offer a solid foundation to protect portfolios while acting as a potential hedge against recession and disinflationary growth stocks. Initial target yields1 of 7.5 per cent (SPAY.U), 9.0 per cent (MPAY.U) and 10.5 per cent (LPAY.U) further offer investors an opportunity to generate significant monthly distributions.
The Premium Yield Suite now trading on the TSX will be offered in both Canadian 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
**Trades in U.S. dollars
Horizons ETFs’ Premium Yield Suite leverages in-house expertise through an actively-managed options program that monitors market conditions and strategically adjusts the options overlay to seek to help manage downside risk and maximize gains across interest rate environments. Utilizing both put and call options on a portfolio of U.S. Treasury securities, the Premium Yield Suite enables flexibility and adaptability which may help to enhance performance across various market conditions.
“Whether you’re cautious in response to 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 provides a duration and target yield that may align with your unique goals, risk tolerance and monthly income needs,” continued Mr. Mehta. “With premiums generated from option-writing expected to be treated as capital gains, these ETFs may further offer tax-efficient yield enhancement to investor portfolios, as well.”
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.
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