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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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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 units 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 15.00% and 35.00% 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.