TORONTO, June 2, 2017 /CNW/ - Horizons ETFs Management
(Canada) Inc. ("Horizons
ETFs") is pleased to announce that it will reduce the
management fee on the Horizons Cdn Select Universe Bond ETF
("HBB") effective July 1,
2017. The fee will decrease from 0.15% to 0.09%.
HBB seeks to replicate, to the extent possible, the performance
of the Solactive Canadian Select Universe Bond Index (Total
Return), net of expenses. The Solactive Canadian Select Universe
Bond Index (Total Return) is designed to measure the performance of
the Canadian investment-grade fixed income market.
"With this management fee reduction, HBB now has one of the
lowest management fees among the investment-grade bond ETFs in
Canada," said Steve Hawkins, President and Co-CEO of Horizons
ETFs. "Keeping costs low on fixed income ETFs has never been
more important. With a combination of low yields and the
always-looming prospect of rising interest rates, it's essential
for Canadian fixed income investors to reduce the cost of their
bond exposure to ensure they preserve more of their
returns."
HBB is the only Canadian fixed income ETF to use the innovative
total return index ("TRI") structure to provide
tax-efficient exposure to the total returns of the broad Canadian
investment-grade bond market.
TRI ETFs are low-cost, index-replicating ETFs that use a
synthetic replication structure to receive the pre-tax total return
of an index. Unlike physically-replicated ETFs, no distributions
are expected to be paid by the ETF. Instead, the value of any
dividend or interest income is directly reflected in the
performance of the ETF. This leads to greater tax efficiency for
investors who hold the ETF in taxable investment accounts.
"Tax is a big consideration for fixed income investors, since
the income generated from bonds is taxed at an investor's marginal
tax rate. For many Canadians, this means losing nearly half their
annual yield to income taxes," said Mr. Hawkins. "Instead of
paying this tax immediately on income gains, HBB allows investors
in non-registered accounts to have the full pre-tax value of those
income distributions reflected in the value of the ETF. Investors
can essentially defer paying that tax until they sell their units
of the ETF."
While HBB has reduced its management fee to 0.09%, it will still
continue to charge an additional swap fee of about 0.15%, in order
to utilize the tax-advantaged TRI structure. This means the total
cost of owning HBB is approximately 0.24% per year, plus applicable
sales tax.
In our view, even after the swap fee, the after-tax benefits
of HBB's return – deferring taxation on nearly half the yield –
provide a net benefit for many investors," said Mr. Hawkins.
"It's important to remember that management fees are only one
aspect of the cost of owning an ETF; tax is another significant
cost. From that perspective, we believe that HBB is the lowest-cost
fixed income ETF in Canada, when
held in a taxable account."
About Horizons ETFs Management (Canada)
Inc. (www.HorizonsETFs.com)
Horizons ETFs Management (Canada) Inc. and its affiliate AlphaPro
Management Inc. are innovative financial services companies
offering the Horizons ETFs family of exchange traded funds. The
Horizons ETFs family includes a broadly diversified range of
investment tools with solutions for investors of all experience
levels to meet their investment objectives in a variety of market
conditions. Horizons ETFs has $7.7
billion of assets under management and with 77 ETFs listed
on the Toronto Stock Exchange, the Horizons ETFs family makes up
one of the largest families of ETFs in Canada. Horizons ETFs Management (Canada) Inc. and AlphaPro Management Inc. are
members of the Mirae Asset Global Investments Group.
Horizons ETFs is a Member of Mirae Asset Global Investments.
Commissions, trailing commissions, management fees and expenses all
may be associated with an investment in exchange traded products
managed by AlphaPro Management Inc. and 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. The prospectus contains important
detailed information about the Horizons Exchange Traded
Products. Please read the prospectus before
investing.
SOURCE Horizons ETFs Management (Canada) Inc.