Toronto-based Horizons ETFs Management (Canada) Inc. and its affiliate, AlphaPro Management Inc. have launched a new exchange-traded fund (ETF) that is designed to keep risk levels balanced across the asset classes within the portfolio regardless of market conditions.
Horizons Global Risk Parity ETF is the first actively managed ETF in Canada to employ this risk parity strategy, according to the firm’s announcement released Thursday.
“When investors think of a balanced portfolio, it’s the typical ‘60/40′ split between stocks and bonds that comes to mind,” says Steve Hawkins, co-CEO of Horizons ETFs, in a statement. “However, these so-called ‘balanced’ portfolios have performed poorly during financial crises because they were only diversified on a capital basis and not according to asset class risk.
“[Horizons Global Risk Parity ETF] strives to keep risk levels across asset classes similar to one another, which can result in lower overall volatility and potentially higher risk-adjusted returns,” he adds.
The new ETF can invest in global equity markets, global fixed-income instruments and inflation hedges such as gold bullion, real estate and Treasury Inflation Protected Securities (TIPS). The ETF will have an actively managed currency hedging strategy that looks to reduce the impact of foreign-exchange risk.
Toronto-based ReSolve Asset Management Inc. is subadvising Horizons Global Risk Parity ETF, which began trading on the Toronto Stock Exchange on Thursday.
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