Toronto-based Horizons ETFs Management (Canada) Inc. has announced the launch of Horizons China High Dividend Yield Index ETF, which provides exposure to high dividend yielding Hong Kong-listed equity securities.
Units of the exchange-traded fund (ETF) began trading on the Toronto Stock Exchange on Tuesday in Canadian dollars under the ticker symbol “HCN.”
The new ETF seeks investment results that, before fees and expenses, correspond in general to the performance of the Hang Seng high-dividend yield index, according the Horizons ETFs announcement. This underlying index is designed to measure the performance of 50 of the highest-dividend yielding equity securities, which include real estate investment trusts, in the Hang Seng Index.
“Historically, many Canadian investors sought exposure to emerging Asia by holding North American multi-national stocks, which have business interests in Asian economies,” says Steve Hawkins, Co-CEO of Horizons ETFs, in a statement. “The dynamics of the Chinese economy are changing and, in order to really capture China’s long-term economic growth, investors should consider the direct exposure that HCN provides.”
China is currently the world’s second-largest economy, by gross domestic product, surpassing US$10 trillion in 2014 and predicted to more than double to US$22 trillion by 2030, according to South Korea-based Mirae Asset Global Investments, Horizons’ parent company, in a statement.
China’s growth rate is expected to range between 6% and 8% over the next few years — almost four times the growth rate expected for developed economies such as the U.S. and Canada, Mirae adds.
Through the new ETF, investors gain exposure to China’s robust economic growth through equities securities that have a consistent three-year track record of paying dividends. A significant number of the Hong Kong-listed dividend-paying companies are China-based companies or have substantial business interests in mainland China, according to Horizons ETFs.
“By investing in top dividend-paying companies listed on the Hong Kong Stock Exchange, investors are not only getting timely exposure to Chinese companies with consistent dividend yields, but are also getting the added benefit of Hong Kong’s modern market reforms, regulatory oversight and structure,” Hawkins adds.
Beginning with the entire universe of large-cap and mid-cap issuers in the Hang Seng index, the Hang Seng high-dividend yield index is created by screening for three factors: liquidity, dividend-paying track record, while eliminating listings with the highest one-year volatility.
In addition to HCN, Horizons Hang Seng High Dividend Yield ETF, listed on the Hong Kong Stock Exchange and managed by Mirae Asset Global Investments (Hong Kong) Ltd., a Mirae subsidiary, also tracks this underlying index.
“This is essentially the first cross-listed mandate offered in Canada that also exists in our Hong Kong-based ETF business,” says Taeyong Lee, co-CEO of Horizons ETFs and president of Mirae’s global ETF business.
Headquartered in South Korea, Mirae Asset Global Investments Group has in excess of US$75 billion of assets under management as of Dec. 31, 2015.