Horizons launches low-cost ETFs

Horizons ETFs Management (Canada) Inc. launched two new products with direct management fees of 0%. Management fees will be based on only the underlying funds.

The Horizons Conservative TRI ETF Portfolio and the Horizons Balanced TRI ETF Portfolio started trading Thursday on the TSX.

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Steve Hawkins, president and co-CEO of Horizons ETFs, said the new products are the only ETFs in Canada that don’t charge a topline management fee or operating costs.

“Since these ETFs will own other Horizons ETFs, there are still fees indirectly charged by the underlying ETFs held in the portfolio,” he said in a release. “All-in, these new portfolio solutions are still very low-cost by ETF industry standards.”

Both ETFs invest exclusively in Horizons TRI ETFs, which use a “total return swap investment structure designed to deliver returns in a low-cost and tax-efficient manner,” the release said.

Unitholders will pay management fees on the underlying Horizons TRI ETFs, which will determine their management expense ratio (MER). Horizons estimates that MER will not exceed 0.17% for the conservative fund and 0.18% for the balanced fund.

The trading expense ratios, which are subject to change, are expected to be 0.18% and 0.20%, respectively.

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Horizons Conservative TRI ETF Portfolio seeks “moderate, long-term capital growth using a conservative portfolio of exchange traded funds,” the release said, targeting an asset allocation of 50% equity securities and 50% fixed income securities with semi-annual rebalancing.

Horizons Balanced TRI ETF Portfolio seeks “long-term capital growth” with an asset allocation of approximately 70% equity securities and 30% fixed income securities, also with semi-annual rebalancing, the release said.

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Staff

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