TORONTO, April 10, 2018 /CNW/ - Horizons ETFs
Management (Canada) Inc. (the
"Manager") announced today that it will be terminating the
BetaPro S&P 500 VIX Short-Term Futures™ 2X Daily
Bull ETF (HVU) and the BetaPro S&P 500 VIX Short-Term
Futures™ Daily Inverse ETF (HVI) (collectively, the
"ETFs") effective at the close of business on Monday, June 11, 2018 (the "Termination
Date"). Details of the ETFs are as follows:
ETF
Name
|
Class of
Units
|
Ticker
|
BetaPro S&P 500
VIX Short-Term Futures™ 2X Daily Bull ETF
|
Class A
|
HVU
|
BetaPro S&P 500
VIX Short-Term Futures™ Daily Inverse ETF
|
Class A
|
HVI
|
Effective immediately, no further direct subscriptions for units
of the ETFs will be accepted. Tuesday, June
5, 2018, is expected to be the last date on which a
redemption request may be placed with the Manager, and the ETFs are
expected to be de-listed from the Toronto Stock Exchange, at the
request of the Manager, at the close of business on or about
Wednesday, June 6, 2018, with all
units still held by investors being subject to a mandatory
redemption as of the Termination Date.
Since early February of this year, the pricing in S&P 500
VIX futures has been very irrational and erratic. This volatility,
in the case of HVI and HVU, has, in the Manager's view,
significantly changed the risk profile of these two ETFs to be far
too high for Canadian investors.
Horizons ETFs is of the opinion that ETFs that provide exposure
that are expected to generate returns that are greater than, or
inverse to, one-times the daily price return of volatility futures
specifically no longer offer an acceptable risk/reward trade-off
for Canadian investors.
"After reassessing the performance of HVU and HVI,
particularly their respective performance following the first week
of February, when volatility futures contracts spiked by more than
100% during one 24-hour trading period, we have come to the
conclusion that these ETFs no longer offer an acceptable
risk/reward trade-off for investors," said Steve Hawkins, President and Co-CEO of Horizons
ETFs. "We are an asset manager that generates revenue from
management fees on our products, so our goals are, and have always
been, aligned with those of our ETF investors: we want our
investors to generate positive returns. Ultimately, we do not want
to be offering investment products that have the potential to lose
the majority of an investor's capital in such a short period of
time."
Horizons ETFs is the only provider of leveraged ETFs in
Canada. Leveraged ETFs are
designed to provide double the daily exposure (either long or
short) to a commodity, benchmark or index. They seek to deliver two
times (2X) the daily return (either on the upside or downside)
before fees and expenses of that commodity, benchmark or index.
Inverse ETFs aim to achieve the inverse (opposite) (-1X) of the
daily performance of their respective underlying benchmark before
fees and expenses. Horizons ETFs believes there is a reasonable and
transparent amount of daily market risk with all of its other
BetaPro-branded ETFs, including the BetaPro S&P 500 VIX
Short-Term Futures™ ETF (HUV), which offers single-long
(1x) daily exposure to the same underlying index as HVU and HVI.
HUV will continue to be listed on the Toronto Stock Exchange and
will continue to provide a method for investors to get exposure to
S&P 500 VIX Futures contracts.
"We continue to stand by our remaining line-up of BetaPro
ETFs as a way for tactically-focused short-term investors to profit
or protect their portfolios from market activity," said Mr.
Hawkins. "We've always been very upfront that our line-up of
BetaPro ETFs, which offer both leveraged and inverse leveraged
exposure to a multitude of equity and commodity benchmarks, is for
short-term, high-conviction investors who have a substantial amount
of investment knowledge and risk tolerance. With these ETFs comes
the opportunity to use leveraged ETFs to potentially generate daily
excess returns from short-term changes in an asset class. In the
specific case of leverage and inverse exposure to volatility
futures, we now feel the potential risk of loss simply exceeds the
potential reward."
Any remaining unitholders of the ETF as at the Termination Date
will receive the net proceeds from the liquidation of the assets,
less all liabilities and all expenses incurred in connection with
the dissolution of the ETF, on a pro-rata basis.
About Horizons ETFs Management (Canada)
Inc. (www.HorizonsETFs.com)
Horizons ETFs Management (Canada) Inc. is an innovative financial
services company and offers one of the largest suites of exchange
traded funds in Canada. The
Horizons ETFs product suite includes a broadly diversified range of
solutions for investors of all experience levels to meet their
investment objectives in a variety of market conditions. Horizons
ETFs has approximately $10 billion of
assets under management and 81 ETFs listed on major Canadian stock
exchanges. Horizons ETFs Management (Canada) Inc. is a member of the Mirae Asset
Global Investments Group.
Commissions, management fees and expenses all may be
associated with an investment in exchange traded products managed
by Horizons ETFs Management (Canada) Inc. (the "Horizons Exchange Traded
Products"). The Horizons Exchange Traded Products are not
guaranteed, their values change frequently and past performance may
not be repeated. Please read the relevant prospectus before
investing.
The Horizons Exchange Traded Products consist of the Horizons
Index ETFs ("Index ETFs"), 2x Daily Bull and 2x Daily Bear ETFs
("2x Daily ETFs"), Inverse ETFs ("Inverse ETFs") and VIX ETFs
(defined below). The 2x Daily ETFs and certain other Horizons
Exchange Traded Products use leveraged investment techniques that
can magnify gains and losses and may result in greater volatility
of returns. These Horizons Exchange Traded Products are subject to
leverage risk and may be subject to aggressive investment risk and
price volatility risk, which, where applicable, are described in
their respective prospectuses. Each 2x Daily ETF seeks a return,
before fees and expenses, that is either 200% or -200% of the
performance of a specified underlying index, commodity or benchmark
(the "Target") for a single day. Each Index ETF or Inverse ETF
seeks a return that is 100% or -100%, respectively, of the
performance of a Target. Due to the compounding of daily returns, a
2x Daily ETF's or Inverse ETF's returns over periods other than one
day will likely differ in amount and, for the 2x Daily ETFs,
possibly direction from the performance of their respective
Target(s) for the same period. The Horizons Exchange Traded
Products whose Target is the S&P 500 VIX Short-Term Futures
Index™ (the "VIX ETFs"), one of which is a 2x Daily VIX ETF, one of
which is a (1x) VIX ETF, and one of which is a (-1x) Inverse VIX
ETF as described in their prospectus, are speculative investment
tools that are not conventional investments. The VIX ETFs' Target
is highly volatile. As a result, the VIX ETFs are not generally
viewed as stand-alone long-term investments. Historically, the VIX
ETFs' Target has tended to revert to a historical mean. As a
result, the performance of the VIX ETFs' Target is expected to be
negative over the longer term and neither the 2x Daily nor (1x) VIX
ETFs nor their Target are expected to have positive long term
performance. In addition, the VIX ETFs' Target has historically
experienced some significant one-day increases when equity markets
have had large negative returns which, if repeated, could cause the
Inverse (-1x) VIX ETF to suffer substantial
losses. Investors should monitor their holdings, as
frequently as daily, to ensure that they remain consistent with
their investment strategies.
SOURCE Horizons ETFs Management (Canada) Inc.