Looking To Get More From Your Core?
The U.S. equity market represents more than 40% of the global equity market, with large-cap U.S equities representing approximately 70% of the total U.S. market. Many of these “blue chip” companies are included within the S&P 500, a major stock index designed to measure the large-cap segment of the U.S. market
Their size isn’t the only significant factor in their appeal:
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Consistent Dividend Growth: The annualized growth rate of dividends for the S&P 500® Index was 5.77% for the five-year period from May 31, 2018 to May 31, 2023.* |
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Annualized Return: The annualized return for the S&P 500® Index was 6.82% from May 31, 2000 to May 31, 2023.* |
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S&P 500 Outperformance: Over the last 20 years, the majority of U.S.-listed U.S. large-cap equity funds failed to outperform the S&P 500® , except for during three years – 2005, 2007 and 2009 – according to S&P Dow Jones Indices . |
*Source: Bloomberg, as at May 31, 2023.
Horizons ETFs’ U.S. Large-Cap Equity Essentials Suite
Horizons ETFs’ U.S. Large-Cap Equity Essentials suite offers big and bold ways to help you reach your investing goals.
With ETFs offering Core, Covered Call, Enhanced or Enhanced Covered Call exposure, now you can invest your way in U.S. Large-Cap Equities, whether your focus is on total return, monthly income, or potential higher growth.
| ETF Name | Ticker | Equity Exposure | Mgmt. Fee† | |
|---|---|---|---|---|
| Core | Horizons S&P 500® Index ETF | HXS | Tax-Efficient Exposure to the S&P 500® Index | 0.10% |
| Horizons US Large Cap Index ETF | HULC | Tax-Efficient Exposure to the Solactive US Large Cap Index Index | 0.08% | |
| Targeting Yield | Horizons US Large Cap Equity Covered Call ETF | USCC | Covered Call Exposure to U.S. Large-Cap Equities | 0.39%1 |
| Targeting Yield & Growth |
Horizons Enhanced US Large Cap Equity Covered Call ETF | USCL | 1.25 times Covered Call Exposure to U.S. Large-Cap Equities | 0.65% |
†Plus applicable Sales Tax
1Annual management fee reduced from 0.65% to 0.39%, effective July 6, 2023
1Annual management fee reduced from 0.65% to 0.39%, effective July 6, 2023
Access the U.S. Large-Cap Equities with Four Different Ways to Invest:
Tax-Efficient Index Exposure: Horizons ETFs offers products that can provide exposure to all of the major three Equity Essential benchmarks through our Total Return Index (TRI) family of ETFs, including U.S. large cap equities. The TRI ETFs are tax-efficient, index-tracking ETFs that provide exposure to a range of equity and fixed-income benchmarks within a corporate class structure.
TRI ETFs are not expected to make taxable distributions, which can offer distinct advantages if held in taxable or non-registered accounts and mean that an investor is generally only expected to be taxed on any capital appreciation of the ETF if, and when, the shares of their ETF are sold. TRI ETFs can offer a greater after-tax return on investment when held in a non-registered account, compared to a traditional, physically-replicated index ETF.
For investors seeking tax efficiency, consider core index exposure to our U.S. Large-Cap Equity Essentials, through the Horizons S&P 500® Index ETF (HXS) or the Horizons US Large Cap Index ETF (HULC).
Covered Call ETFs: Horizons ETFs offers covered call exposure for each of the Equity Essential categories, including U.S. large cap equities. These ETFs invest in an equity index strategy that provides exposure to an underlying Equity Essential benchmark. An experienced options strategy team then writes covered calls on up to 50% of the underlying equity exposure, at the Manager’s discretion, which can increase the amount of income generated by the strategy. Historically, this income gets paid out monthly. More information on our suite of Covered Call ETFs can be found here: https://horizonsetfs.com/covered-call
For investors targeting yield, consider covered call exposure to our U.S. Large-Cap Equity Essentials, through the Horizons US Large Cap Equity Covered Call ETF (USCC).
Lightly Levered “Enhanced” Covered Call Exposure: Each of our Equity Essentials covered call strategies have an enhanced version which provides approximately 1.25 times (125%) exposure to the underlying covered call ETF, including for U.S. large-cap equities. The use of a modest 1.25 times leverage should potentially increase the return potential of the underlying equity exposure and enhance the monthly distribution potential.
For investors targeting yield and growth, consider enhanced covered call exposure to our U.S. Large-Cap Equity Essentials, through the Horizons Enhanced US Large Cap Equity Covered Call ETF (USCL).
Get Exposure Your Way
Looking for traditional, low-cost* exposure or seeking a big and bold way to invest in U.S. Large-Cap Equities?
Our U.S. Large-Cap Equity Essentials Suite offers investors different ways to invest with varying degrees of exposure, yield, and growth potential
*Relative to the typical MER of comparable, regular mutual funds.
1Annualized distribution yield, as at October 31, 2023. 2Annual management fee reduced from 0.65% to 0.39%, effective July 6, 2023
Spotlight: Light Levered “Enhanced” Exposure
Our U.S. Large Cap Equity Essentials Suite includes a lightly leveraged ETF that offer “Enhanced” exposure to their underlying holdings (about 125%).
This exposure is achieved by applying light leverage to a covered call ETF to magnify exposure to their underlying index or assets, which may enhance returns. This strategy can increase the monthly income generated and also provide more growth potential. While these ETFs can provide higher yields and growth, they also carry a higher risk-return profile and can lose in down market environments.
How does it work?
These ETFs can be an effective way to increase potential gains for income-focused, or short-term investment strategies. Horizons ETFs’ Enhanced ETFs will seek to achieve its investment objectives by a leverage ratio of approximately 125% through the use of cash borrowing, or as otherwise permitted under applicable securities legislation. The leverage is not reset daily.
Each dollar of your investment in one of our Enhanced ETFs is invested into the underlying ETF. Then, we borrow 25% of the invested amount which is also invested in the underlying ETF resulting in you getting magnified gains (and losses), less the cost of borrowing.
Learn more about The Three Major Equity Essentials Suites below:
Canada’s Big Six Banks
Canada’s Big Six Banks – Toronto-Dominion Bank (TD), Royal Bank of Canada (RBC), Bank of Montreal (BMO), Bank of Nova Scotia (BNS), Canadian Imperial Bank of Commerce (CIBC), and National Bank of Canada (NBC) – have traditionally been a source of stable dividend income for investors in one of the country’s largest sectors. Together, they currently represent approximately 25% of the total market capitalization of the S&P/TSX 60™ Index.
Large-Cap Canadian Equity
Canada’s largest and most liquid companies typically trade on the Toronto Stock Exchange, with many offering some level of income through dividend yield. Many of these “blue chip” companies are included within the S&P/TSX 60™ Index, which is designed to measure the large-cap segment of the Canadian market.
Disclaimer
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.
Annualized Distribution Yield is the most recent regular distribution (excluding additional year-end distributions) annualized for frequency, divided by Net Asset Value (NAV) as at October 31, 2023.
The payment of distributions, if any, is not guaranteed and may fluctuate at any time. The payment of distributions should not be confused with an Exchange Traded Fund’s (“ETF”) performance, rate of return, or yield. If distributions paid by the ETF are greater than the performance of the ETF, distributions paid may include a return of capital and an investor’s original investment will decrease. A return of capital is not taxable to the investor, but will generally reduce the adjusted cost base of the securities held for tax purposes. Distributions are paid as a result of capital gains realized by an ETF, and income and dividends earned by an ETF are taxable to the investor in the year they are paid. The investor’s adjusted cost base will be reduced by the amount of any returns of capital. If the investor’s adjusted cost base goes below zero, investors will realize capital gains equal to the amount below zero. Future distribution dates may be amended at any time. To recognize that these distributions have been allocated to investors for tax purposes the amounts of these distributions should be added to the adjusted cost base of the units held. The characterization of distributions, if any, for tax purposes, (such as dividends/other income/capital gains, etc.) will not be known for certain until after the ETF’s tax year-end. Therefore, investors will be informed of the tax characterization after year-end and not with each distribution if any. For tax purposes, these amounts will be reported annually by brokers on official tax statements. Please refer to the applicable ETF distribution policy in the prospectus for more information.
Horizons Total Return Index ETFs (“Horizons TRI ETFs”) are generally index-tracking ETFs that use an innovative investment structure known as a Total Return Swap to deliver index returns in a low-cost and tax-efficient manner. Unlike a physical replication ETF that typically purchases the securities found in the relevant index in the same proportions as the index, most Horizons TRI ETFs use a synthetic structure that never buys the securities of an index directly. Instead, the ETF receives the total return of the index through entering into a Total Return Swap agreement with one or more counterparties, typically large financial institutions, which will provide the ETF with the total return of the index in exchange for the interest earned on the cash held by the ETF. Any distributions which are paid by the index constituents are reflected automatically in the net asset value (NAV) of the ETF. As a result, the Horizons TRI ETF receives the total return of the index (before fees), which is reflected in the ETF’s share price, and investors are not expected to receive any taxable distributions. Certain Horizons TRI ETFs (Horizons Nasdaq-100 ® Index ETF and Horizons US Large Cap Index ETF) use physical replication instead of a total return swap.
USCL (or an “Enhanced ETF”) is an alternative mutual funds within the meaning of NI 81-102, and is permitted to use strategies generally prohibited by conventional mutual funds, such as the ability to invest more than 10% of the Enhanced ETF’s net asset value in securities of a single issuer, the ability to borrow cash and to employ leverage. While this strategy will only be used in accordance with the applicable investment objectives and strategies of the Enhanced ETFs, during certain market conditions they may accelerate the risk that an investment in Units of such Enhanced ETF decreases in value.
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.
All comments, opinions and views expressed are generally based on information available as of the date of publication and should not be considered as advice to purchase or to sell mentioned securities. Before making any investment decision, please consult your investment advisor or advisors.