Horizons launches Active S&P/TSX 60 Covered Call ETF

The investment objective of HAX is to provide unitholders with exposure to the performance, to the extent possible, of the S&P/TSX 60 Index, together with the impact of a covered call strategy, before fees and expenses; and monthly distributions of dividend and call option income.

HAX will hold all 60 of the constituent stocks in the S&P/TSX 60 Index in proportion to their respective weights in the index. The ETF will write covered call options on the option eligible securities in the portfolio to generate a tax-efficient, monthly distribution. The level of covered call option writing may vary based on market volatility and other factors.

“This is the first covered call ETF in Canada that will proportion its holdings to that of S&P/TSX 60 Index, which is, in our view, the most important Canadian stock benchmark,” says Howard Atkinson, CEO of Horizons Exchange Traded Funds Inc. “Covered call strategies have historically been shown to enhance the income earned from stocks while reducing volatility.”

Horizons Investment Management Inc., (HIMI) an affiliate of AlphaPro Management Inc., is the investment manager to the ETF. The HIMI investment team, including Eden Rahim, vice president and options strategist, provides the portfolio management services to the ETF. HAX will be the eighth equity-focused covered call ETF that Horizons ETFs has launched which uses Rahim’s dynamic covered call writing strategy.

“Eden and the team oversee more than $500 million in assets on behalf of Horizons ETFs,” said Atkinson. “They have done a terrific job of raising awareness to covered call products in Canada and the benefits they can potentially offer investors including generating income and mitigating portfolio risk.”