March 16, 2020 - Many of the fixed income ETFs offered by Horizons ETFs are currently experiencing abnormally wide bid/ask spreads – the difference in price between the bid price and the ask price of the ETFs. This is a cost that ETF unit holders pay in addition to their commissions and management fees on ETFs.  Generally, the wider the bid/ask spread, the greater the cost of ownership for that ETF.

The wider-than-normal bid/ask spreads that we are currently observing are the direct result of the volatility in the fixed income market, where the underlying bonds and other over-the-counter fixed income securities held by ETFs are experiencing very high levels of volatility. These market conditions are forcing the market makers, who subscribe for and redeem units of the ETFs, to increase their hedges against intra-day market volatility.

This is not unique to Horizons ETFs; most of the ETF industry is dealing with much wider-than-normal spreads which are a direct result of this intra-day market volatility and the requirement for market makers to hedge that intra-day market risk.

It is important to understand that while these spreads are most noticeable on fixed income ETF pricing, due to the transparency of ETF pricing, anyone transacting in the over-the-counter fixed income market would likely see even wider bid/ask spreads than what are reflected in these ETF prices.

Horizons ETFs offers the following recommendations for investors looking to buy or sell fixed income ETFs.

  1. Avoid buying and selling fixed income ETFs:  It is imperative to highlight that all of the fixed income ETFs offered by Horizons ETFs are trading, but Horizons ETFs cannot reliably assure investors that “market orders” for these ETFs will trade at a reasonable bid/ask spread.  While we always recommend the use of “limit orders”, in this time of extreme volatility, we would recommend that investors not transact in fixed income ETFs unless they need to do so, and if so, they need to be aware of the additional cost of the currently wide bid/ask spreads and how they impact the pricing of the ETFs.
  2. Contact Horizons ETFs:  If a unit holder needs to transact in any of our fixed income ETFs, we strongly urge them to contact Horizons ETFs before placing an order.  We will make all reasonable efforts to assist the unit holder in executing transactions in any of these ETFs more efficiently. 

Unit holders can contact us directly at 1-866-641-5739 or email us at

Certain statements may constitute a forward-looking statement, including those identified by the expression “expect” and similar expressions (including grammatical variations thereof). The forward-looking statements are not historical facts but reflect the author’s current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. These and other factors should be considered carefully and readers should not place undue reliance on such forward looking statements. These forward-looking statements are made as of the date hereof and the authors do not undertake to update any forward-looking statement that is contained herein, whether as a result of new information, future events or otherwise, unless required by applicable law.

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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 include our BetaPro products (the “BetaPro Products”). The BetaPro Products are alternative mutual funds within the meaning of National Instrument 81-102 Investment Funds, and are permitted to use strategies generally prohibited by conventional mutual funds: the ability to invest more than 10% of their net asset value in securities of a single issuer, to employ leverage, and engage in short selling to a greater extent than is permitted in conventional mutual funds. While these strategies will only be used in accordance with the investment objectives and strategies of the BetaPro Products, during certain market conditions they may accelerate the risk that an investment in shares of a BetaPro Product decreases in value. The BetaPro Products consist of our 2x Daily Bull and 2x Daily Bear ETFs (“2x Daily ETFs”), Inverse ETFs (“Inverse ETFs”) and our BetaPro S&P 500 VIX Short-Term Futures™ ETF (the “VIX ETF”). Included in the 2x Daily ETFs and the Inverse ETFs are the BetaPro Marijuana Companies 2x Daily Bull ETF (“HMJU”) and BetaPro Marijuana Companies Inverse ETF (“HMJI”), which track the North American MOC Marijuana Index (NTR) and North American MOC Marijuana Index (TR), respectively. The 2x Daily ETFs and certain other BetaPro Products use leveraged investment techniques that can magnify gains and losses and may result in greater volatility of returns. These BetaPro Products are subject to leverage risk and may be subject to aggressive investment risk and price volatility risk, among other risks, which 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 futures index or benchmark (the “Target”) for a single day. Each Inverse ETF seeks a return that is –100% of the performance of its 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, particularly in the case of the 2x Daily ETFs, possibly direction from the performance of their respective Target(s) for the same period. Hedging costs charged to BetaPro Products reduce the value of the forward price payable to that ETF. Due to the high cost of borrowing the securities of marijuana companies in particular, the hedging costs charged to HMJI are expected to be material and are expected to materially reduce the returns of HMJI to unitholders and materially impair the ability of HMJI to meet its investment objectives. Currently, the manager expects the hedging costs to be charged to HMJI and borne by unitholders will be between 10.00% and 45.00% per annum of the aggregate notional exposure of HMJI’s forward documents. The hedging costs may increase above this range. The manager will publish, on its website, the updated monthly fixed hedging cost for HMJI for the upcoming month as negotiated with the counterparty to the forward documents, based on the then current market conditions. The VIX ETF, which is a 1x ETF, as described in the prospectus, is a speculative investment tool that is not a conventional investment. The VIX ETF’s Target is highly volatile. As a result, the VIX ETF is not intended as a stand-alone long-term investment. Historically, the VIX ETF’s Target has tended to revert to a historical mean. As a result, the performance of the VIX ETF’s Target is expected to be negative over the longer term and neither the VIX ETF nor its target is expected to have positive long-term performance. Investors should monitor their holdings in BetaPro Products and their performance at least as frequently as daily to ensure such investment(s) 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.