Horizons unveils bond ETF

Toronto-based Horizons ETFs Management (Canada) Inc. has launched Horizons Canadian Select Universe Bond Exchange-Traded Fund (ETF), which will provide investors with exposure to the Canadian investment-grade bond universe. This new ETF seeks to replicate the performance of the Solactive Canadian select universe bond index, which is compiled by Germany-based index provider Solactive AG. Recognizing that sampling is a reality of bond indexing, this index seeks to reduce replication costs by having fewer constituents. The index currently holds only 180 liquid bonds and offers duration, yield and return characteristics similar to that of the broader Canadian investment-grade bond universe. The new ETF is suitable for investors looking to invest in fixed-income within non-registered accounts, as the distributions are not taxable. Horizons Canadian Select Universe Bond ETF will use a total return swap structure similar to that used by Horizons S&P/TSX 60 Index ETF and Horizons S&P 500 Index ETF, which can reduce the risk of tracking error for ETFs that arises when seeking to replicate their referenced indices while also providing tax efficiency for investors. The management fee for the new ETF is 0.15%.

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