Horizons ETFs has expanded its suite of asset allocation solutions with the launch of a new ETF portfolio on Toronto Stock Exchange.
Steve Hawkins, President and CEO of Horizons ETFs.
The Horizons Growth TRI ETF Portfolio (HGRO CN) is structured as an ETF of ETFs and provides 100% developed market equity exposure by investing in other Horizons ETFs.
The ETF portfolio targets geographic allocation weights of 16.4% to Canada (via the Horizons S&P/TSX 60 Index ETF); 55% to the US (via the Horizons S&P 500 Index ETF and Horizons NASDAQ-100 Index ETF); and 28.6% to global ex-North America (via the Horizons EuroStoxx Index ETF and Horizons Intl Developed Markets Equity Index ETF).
The portfolio is rebalanced to target weights semi-annually.
The ETF portfolio complements Horizons’ two existing ETF portfolios which launched in August 2018 – the Horizons Conservative TRI ETF Portfolio (HCON CN) targets an asset allocation of 50% equities and 50% fixed income, while the Horizons Balanced TRI ETF Portfolio (HBAL CN) targets an asset allocation of 70% equities and 30% fixed income.
The three ETF Portfolios may offer significant tax benefits if they are held in a taxable account, since they only invest in the firm’s total return ETFs which are designed to enhance the after-tax performance benefits of the ETF.
Horizon’s total return ETFs utilize a swap-based structure to obtain their underlying exposures. Unlike physically replicated ETFs, no dividend or interest income distributions are paid by swap-based ETFs. Instead, the value of any dividend or interest income is directly reflected in the net asset value of the underlying ETFs.
Similar to the first two ETF portfolios in the suite, the new all-equity ETF portfolio charges no direct management fees; however, investors will still need to pay the management fees associated with investing in the underlying ETFs. This cost is not expected to exceed 0.19%.
Investors will also need to pay the trading costs associated with the semi-annual rebalance of the ETF Portfolio. Based on the historical trading expense ratios of the underlying ETFs, the ETF portfolio’s aggregate trading expense ratio is expected to be 0.28%.
Steve Hawkins, President and CEO of Horizons ETFs, commented, “While mutual funds may have historically dominated the one-ticket-solution investing space, commonly referred to as balanced funds or fund-of-funds, today’s Canadian marketplace is seeing significant demand from retail and institutional investors for one-ticket ETF solutions.
“HGRO is an equity-focused ETF that provides broad global equity exposure, with the added benefits of using our TRI ETFs, which have low index replication tracking error in a low fee structure.”