TORONTO – December 2, 2019 – Horizons ETFs Management (Canada) Inc. (“Horizons ETFs”) announced today that it has completed the reorganization (the “Reorganization”) of fifteen exchange-traded funds (the “Reorganized ETFs”) listed in the table below into Horizons ETF Corp., a multi-class corporate fund structure managed by Horizons ETFs, as approved by unitholders of the ETFs at special meetings held last month. The Reorganization was effected after the close of business on November 29, 2019.

The Reorganized ETFs are the Horizons ETFs’ Total Return Index suite of ETFs (“TRI ETFs”) – a unique to Canada ETF structure that offers investors tax-efficient exposure to 13 different indices and asset classes.

"With the completion of this second phase of our corporate class reorganization, we expect our Total Return Index ETFs to provide meaningfully better after-tax returns than traditional, physically-replicated ETF strategies, for taxable Canadian investors," said Steve Hawkins, President and CEO of Horizons ETFs. "The corporate class reorganization was specifically designed and proposed to unitholders for the purpose of maintaining the structural advantages that the ETFs have enjoyed since inception as trusts, which include low tracking error, tax-efficiency for taxable accounts, and competitive fees."

The following Reorganized ETFs will begin trading on the TSX as separate corporate classes of ETF shares of Horizons ETF Corp., effective today:

ETF Name Ticker
Horizons Cdn Select Universe Bond ETF HBB
Horizons Equal Weight Canada REIT Index ETF  HCRE
Horizons Equal Weight Canada Banks Index ETF HEWB
Horizons Laddered Canadian Preferred Share Index ETF HLPR
Horizons S&P 500 CAD Hedged Index ETF HSH
Horizons US 7-10 Year Treasury Bond ETF HTB
Horizons US 7-10 Year Treasury Bond CAD Hedged ETF HTH
Horizons Intl Developed Markets Equity Index ETF HXDM
Horizons S&P/TSX Capped Energy Index ETF HXE
Horizons S&P/TSX Capped Financials Index ETF HXF
Horizons Cdn High Dividend Index ETF HXH
Horizons NASDAQ-100® Index ETF HXQ
Horizons S&P 500® Index ETF HXS
Horizons S&P/TSX 60™ Index ETF HXT
Horizons EURO STOXX 50® Index ETF HXX

These TRI ETFs currently use a synthetic replication process known as a total return swap in order to deliver the total return of the applicable index.

Unlike a physically-replicated ETF that typically purchases the securities found in the relevant index in the same proportions as the index, the cash portion of the TRI ETF is put into an interest-earning cash account. The TRI ETF then provides the investor with the total return of the index by 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 plus any applicable swap fees and hedging costs.

About the Corporate Class

All of the TRI ETFs have merged into a single multi-class corporate fund structure, which permits the ETFs to improve operational efficiency, aggregate all future gains and losses on both the income and capital accounts, and substantially reduce the likelihood of distributions.

All of these ETFs use our unique in Canada synthetic replication process and have maintained the same tickers and investment objectives. These ETFs simply use a new corporate class structure to preserve all the advantages of the Total Return Index strategy.” said Mr. Hawkins. “We’ve built up a large unitholder base for these ETFs over the last ten years, and we appreciate their patience as we have completed this transition. Our family of Total Return Index ETFs will continue to be, in our view, the best way for taxable Canadian investors to get exposure to these popular index strategies.

As previously announced on November 28, 2019, Horizons ETFs completed a similar corporate class reorganization in respect of the 29 ETFs from Horizons ETFs’ BetaPro and Commodity suites of ETFs, after the close of business on November 27, 2019 (the “Previous Reorganization”).

The Reorganization and the Previous Reorganization are not expected to be taxable events for Canadian resident unitholders of the affected ETFs, provided that unitholders with ETF units in taxable accounts make a joint election with Horizons ETF Corp. under Section 85 of the Income Tax Act (Canada) for the exchange of their trust units into the corresponding class of ETF Shares of Horizons ETF Corp., to occur on a tax-deferred basis. Horizons ETFs has established a process to provide assistance to unitholders in taking the necessary steps to file the joint election, which is available free of charge. Additional information of the Section 85 election can be found here:

About Horizons ETFs Management (Canada) Inc. (
Horizons ETFs Management (Canada) Inc. is an innovative financial services company and offers one of the largest suites of exchange traded funds in Canada. The Horizons ETFs product family includes a broadly diversified range of solutions for investors of all experience levels to meet their investment objectives in a variety of market conditions. Horizons ETFs has approximately $10 billion of assets under management and 91 ETFs listed on major Canadian stock exchanges.

For investor inquiries:
Contact Horizons ETFs at 1-866-641-5739 (toll-free) or (416) 933-5745

For media inquiries:
Contact Jonathan McGuire
External Communications Manager
Horizons ETFs Management (Canada) Inc.
(416) 640-2956

Certain statements may constitute a forward looking statement, including those identified by the expressions “anticipate”, “estimate” or “expect” and similar expressions (including grammatical variations thereof) to the extent they relate to the ETFs or Horizons ETFs. The forward-looking statements are not historical facts but reflect the ETFs, the ETF’s managers or Horizons ETFs 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 the ETFs’ forward looking statements. These forward-looking statements are made as of the date hereof and the ETFs 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.

Download PDF

Share This Article

Next article

Horizons ETFs Reduces Management Fees on Equal Weight Banks, REIT and Canadian Preferred Share Index

This website uses cookies to ensure we give you the best experience. By continuing to browse the site, you are agreeing to our use of cookies. Click here to read our privacy policy.

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 sahres 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.