Low trading volume of an ETF does not mean poor liquidity

The daily trading volume of an ETF is not an accurate reflection of its liquidity. This is a result of the involvement of the designated market maker whose core responsibility is to maintain an inventory of units of the ETF and provide liquidity for investors to buy and sell when they choose to do so, without concern. The market maker ensures there is always a buyer or seller for the investor at an accurate price.

The designated market maker will also attempt to maintain a tight bid/ask spread so that the price of the ETF closely approximates the net asset value (NAV) per unit throughout the trading day.

Generally, the only factor which could affect the liquidity of an ETF is the liquidity of its underlying portfolio of securities. That is to say, if the ETF invests in securities that are difficult to buy or have low supply, then the market maker may have difficulty buying or selling those securities. This could affect their ability to subscribe for, or redeem, units of the ETF.

Generally, ETFs in Canada have portfolios that are restricted to investing only in liquid securities that trade on North American exchanges, which generally ensures that the price of the ETF closely reflects the value of the underlying portfolio.

Market orders are not always executed at the listed bid/ask prices

There is no guarantee that the order you place with an online broker or advisor will be executed at the listed bid/ask prices. This is one of the reasons why it is highly recommended that investors use a limit order when buying or selling ETFs, regardless of the size of the order.

A limit order sets a price maximum/minimum with which you are willing to buy or sell a quantity of units of the ETF. This protects you from periodic price swings that may occur during the trading day and allows the market makers time to fill your order if the size of the trade is larger than the posted units, which are the number of available units being shown on the exchange.

Prices can even move substantially between when an order is placed and when it is executed, particularly if there is breaking news in the market on a particular sector or security within the ETF’s portfolio.

By using a limit order, you can specify the exact price at which your trade order can be filled. If the bid/ask prices or NAV per unit do not meet the limit order specified price, the order will not be filled. With a limit order, you do not have to worry about buying or selling the ETF at a price you were not expecting.


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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 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 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"), VIX ETFs (defined below) and active ETFs. 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 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 ETF and one of which is an Index 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 VIX ETFs nor their Target are expected to have positive long term performance. Investors should monitor their holdings, as frequently as daily, to ensure that they remain consistent with their investment strategies.

*The indicated rates of return are the historical annual compounded total returns including changes in per unit value and reinvestment of all dividends or distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. The rates of return shown in the table are not intended to reflect future values of the ETF or returns on investment in the ETF. Only the returns for periods of one year or greater are annualized returns.