HBIT is designed to provide investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to the performance of an index that replicates the returns generated over time through exposure to long notional investments in Bitcoin Futures. The current Underlying Index of HBIT is the Horizons Bitcoin Front Month Rolling Futures Index (Excess Return).
Important Risk Considerations
The ETF is very different from most other exchange-traded funds. The ETF is an alternative mutual fund within the meaning of National Instrument 81-102 Investment Funds (“NI 81-102”), and is permitted to use strategies generally prohibited by conventional mutual funds, including with respect to the use of specified derivatives, the ability to employ leverage and borrow cash. While these strategies will only be used in accordance with the investment objectives and strategies of the ETF, during certain market conditions they may accelerate the risk that an investment in ETF Shares decreases in value.
The ETF is not a conventional investment, is highly speculative and is very different from other Canadian exchange traded funds. The ETF is designed to provide investment results that endeavour to correspond to the performance of the Horizons Bitcoin Front Month Rolling Futures Index (Excess Return) (the “Underlying Index”). The Underlying Index tracks Bitcoin Futures (as defined in the Glossary). The Underlying Index tracked by the ETF is highly volatile. As a result, the ETF should not be viewed as a stand-alone long term investment.
There are inherent risks associated with products linked to crypto-assets, including Bitcoin Futures. While Bitcoin Futures are traded on a regulated exchange and cleared by regulated central counterparties, direct or indirect exposure to the high level of risk of Bitcoin Futures will not be suitable for all types of investors. The ETF is exposed, directly or indirectly, to Bitcoin Futures that track the digital currency bitcoin. Given the speculative nature of bitcoin and the volatility of the bitcoin markets, there is considerable risk that the ETF will not be able to meet its investment objectives. An investment in the ETF is not intended as a complete investment program and is appropriate only for investors who have the capacity to absorb a loss of some or all of their investment. An investment in the ETF is considered high risk. The further development and acceptance of bitcoin and other digital currencies, which is part of a new and rapidly changing industry, is subject to a variety of factors that are difficult to evaluate and may impact the performance of the ETF. The slowing or stopping of the development or acceptance of bitcoin may adversely affect an investment in the ETF Shares.
The performance of the Underlying Index and the Bitcoin Futures to which the ETF is exposed, and therefore the performance of the ETF, can be expected to be very different from the spot prices of bitcoin on various crypto-asset trading venues (the “Bitcoin Prices”). The value of the Underlying Index and the ETF’s exposure to Bitcoin Futures may not be correlated with Bitcoin Prices, and accordingly, the value of the Underlying Index and the ETF and may go down when Bitcoin Prices go up (and vice versa). Volatility in the price of bitcoin may lead to consequences such as sudden and significant margin calls in the Bitcoin Futures market. An investor should only consider an investment in the ETF if he or she understands all of the consequences of being exposed, directly or indirectly, to Bitcoin Futures.
Investors should monitor their investment in the ETF at least daily.