Units of Toronto-based Horizons ETFs Management (Canada) Inc.’s newest ETF, Horizons Active Emerging Markets Bond ETF, began trading on the Toronto Stock Exchange on Wednesday under the ticker symbol HEMB.
The ETF seeks to generate income and long-term capital growth by investing primarily in the fixed- and floating-rate debt securities of emerging-markets issuers — a market segment that has strengthened in recent years and offers higher yields than North American bonds.
Montreal-based Fiera Capital Corp. and New York-based Mirae Asset Global Investments (USA) LLC will subadvise the ETF.
“With the constantly evolving conditions within emerging bond markets, we believe active management is the only way to go for this sector,” said Steve Hawkins, president and Co-CEO of Horizons ETFs, in a statement. “[And] Fiera and Mirae are both globally recognized for their expertise in global bond investing.”
Fiera oversees the portfolio strategy of the ETF’s global asset allocation and security selection of sovereign bonds. Driven by macroeconomic views, Fiera’s assigned management responsibility of the ETF will be controlled by its tactical asset-allocation committee. The target mix for sovereign and quasi-sovereign bonds in the portfolio is initially approximately 80%.
“Emerging-market bonds have become a popular choice among investors as of late, and for good reason. In previous months, we’ve seen strong regional performance amid a robust global market,” said François Bourdon, global chief investment officer with Fiera.
Mirae’s investment-management team oversees the security selection of the corporate issues in the portfolio. The target mix for corporate credit in the ETF’s portfolio is initially approximately 20%.
“Recent positive global market trends have boosted the credit worthiness of many corporations within Emerging Markets, making them attractive investments, that under different conditions, might otherwise go overlooked,” said Joon Hyuk Heo, Mirae’s head of global fixed-income investments in New York. “Our corporate debt strategy will target the most attractive securities given the market conditions and sound fundamentals.”
The ETF will have global exposure to fixed-rate and floating-rate instruments issued by sovereign, quasi-sovereign, supranational, and corporate issuers. All U.S. dollar exposure is hedged back to Canadian dollars.