A hallmark of the efficiency of ETFs is the subscription and redemption process, which is done in large blocks of units with dealers rather than on an investor trade by investor trade basis. This allows ETFs to smooth the impact of subscriptions and redemptions on the portfolio of the ETF.
As part of our ongoing commitment to serving all investors and facilitating a smooth process for switches into our family of ETFs, Horizons ETFs is taking in-kind transfers of select Canadian-listed index ETFs in exchange for shares of one of the ETFs from Horizons’ family of Total Return Index (TRI) ETFs that invest in comparable index strategies.
Brokers and dealers, who we interact directly with in the primary market, can purchase a minimum prescribed number of shares (“PNS”) of certain Horizons TRI ETFs in exchange for units of certain ETFs that invest in the same, or a substantially similar, underlying index. Essentially, the applicable Horizons ETF is buyingthe units of the ETF you are switching from at its end-of-day net asset value (“NAV”) in exchange for shares of the Horizons ETF issued to you at its end-of-day NAV.
STEPS FOR EXECUTING AN IN-KIND SUBSCRIPTION
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If an advisor or investor is interested in using Horizons’ in-kind exchange program to switch a designated ETF, they should contact their Horizons ETFs representative about the ETF approval process. |
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If they want to proceed, they must submit an official request and our portfolio management team will review the request to ensure the securities represent the required minimum dollar size and eligibility requirements. |
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If it is an acceptable request, we will communicate with the advisor and the firm’s ETF execution desk, or that of another dealer if needed, who will coordinate with the advisor’s ETF trading desk to perform the in-kind exchange or redemption of the security and the corresponding purchase of the TRI ETF shares at end of day. |
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The advisor will then be required to speak to their ETF execution desk, submit the order and identify the trade as an in-kind switch to be executed at end-of-day NAV. |
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Depending on the time of the final approval, the transfer could be set up for end of day or may need to take place at the close of the next trading day. The end-of-day exchange or redemption process ensures the timing of the value received for securities being switched — versus the value of the shares of the ETF being delivered, are as well aligned as possible — subject to any commission being charged by the dealer executing the switch on your behalf. |
The below list is not exhaustive and other issuers may be acceptable. ETFs shaded in grey are pre-approved for NAV-for-NAV exchange as the ETFs share the same underlying index, and therefore, the same basket of securities.
If an index-tracking ETF is not in the eligible list below, it does not necessarily mean Horizons ETFs cannot accommodate the trade. Horizons ETFs, in certain circumstances, will consider accepting units of certain not-directly-comparable index ETFs that are not listed below. Horizons ETFs maintains final approval on the pre-approved highlighted securities listed below, and at times may not be able to facilitate an in-kind subscription on the ETF names listed below due to a number of factors, including but not limited to market factors, execution of pricing and the size of the order.
In some circumstances, Horizons ETFs will consider taking U.S. listed ETFs, which are highlighted in the table. In these cases, the in-kind process will have to be conducted using a Market On Close (MOC) order rather than at the end-of-day net asset value.
Please note that all in-kind subscriptions are generally subject to minimum size restrictions, and will be a taxable event if the switching ETF units are held in a taxable account.
Horizons ETFs cannot directly execute any trades with you, but can help you contact the appropriate parties to do so. The ETF capital markets desk of most major dealers should be able to directly facilitate the subscription process for you.

Commissions, management fees and expenses all may be associated with an investment in the Horizons Total Return Index ETFs managed by Horizons ETFs Management (Canada) Inc (the “ETF”). The ETF is not guaranteed, its value changes frequently and past performance may not be repeated. The prospectus contains important detailed information about the ETF. Please read the prospectus before investing.
Horizons Total Return Index ETFs (“Horizons TRI ETFs”) are generally index-tracking ETFs that use an innovative investment structure known as a Total Return Swap to deliver index returns in a low-cost and tax-efficient manner. Unlike a physical replication ETF that typically purchases the securities found in the relevant index in the same proportions as the index, most Horizons TRI ETFs use a synthetic structure that never buys the securities of an index directly. Instead, the ETF receives the total return of the index through entering into a Total Return Swap agreement with one or more counterparties, typically large financial institutions, which will provide the ETF with the total return of the index in exchange for the interest earned on the cash held by the ETF. Any distributions which are paid by the index constituents are reflected automatically in the net asset value (NAV) of the ETF. As a result, the Horizons TRI ETF receives the total return of the index (before fees), which is reflected in the ETF’s share price, and investors are not expected to receive any taxable distributions. Certain Horizons TRI ETFs use physical replication instead of a total return swap. The Horizons Cash Maximizer ETF does not track an index but rather a compounding rate of interest paid on a cash deposit that can change over time.
The information contained herein reflects general tax rules only and does not constitute, and should not be construed as, tax advice. Investor situations may differ from those illustrated. Investors should consult with their tax advisors before making any investment decisions.
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