Horizons ETFs launches developed markets futures ETF

Sep 28th, 2017 | By | Category: Equities

Horizons ETFs Management Canada has launched the Horizons Intl Developed Markets Equity Index ETF (TSX: HXDM). The ETF gives indirect exposure to developed market equities, excluding North America.

Horizons ETFs launches developed markets futures ETF

Rather than use physical replication, the ETF uses futures to gain exposure to the MSCI EAFE index.

Steve Hawkins, president and co-CEO of Horizons ETFs, commented: “International developed market equity exposure, i.e. outside of North America, has been the number one asset class for inflows in 2017.

The ETF tracks the Horizons EAFE Futures Roll Index, which reflects the returns generated over time of a long position in a series of futures contracts on the MSCI EAFE Index.

The MSCI EAFE Index is designed to measure the performance of large- and mid-cap securities across 21 developed markets outside the US and Canada. With 924 constituents as of September 2017, the index represents approximately 85% of the free-float adjusted market capitalisation in each country.

Unlike physically replicated ETFs, no distributions are expected to be paid by HDXM. Instead, the value of any dividend or interest income is directly reflected in the performance of the ETF. This leads to greater tax efficiency for investors who hold the ETF in non-registered investment accounts. In addition, tracking error is also reduced since there are no physical replication trading costs.

Hawkins added, “With HXDM, investors can access exposure to the returns of big international names like Unilever, Nestle and Shell without taxation eroding returns.”

The fund has a management fee of 0.20% and a swap fee of 0.30%.

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