AlphaPro Management, manager of the Horizons AlphaPro family of exchange-traded funds, has launched Canada’s first actively managed floating rate bond ETF, the Horizons AlphaPro Floating Rate Bond ETF.
The ETF will begin trading today on the Toronto Stock Exchange under the symbol HFR.
The sub-adviser is Natcan Investment Management.
The investment objective of the ETF is to generate income that is consistent with prevailing short-term corporate bond yields while stabilising its market value from the effects of interest rate fluctuations.
The ETF invests primarily in a portfolio of Canadian debt securities and hedges the portfolio’s interest rate risk to generally maintain a portfolio duration of less than two years. It may also invest in debt securities of US companies directly or through investments in securities of other investment funds, including ETFs.
The ETF may use derivatives, including interest rate swaps, to deliver a floating rate of income. It will seek to hedge its non-Canadian dollar currency exposure to the Canadian dollar at all times.
“The Floating Rate Bond ETF is designed to give investors exposure to a portfolio of quality corporate bond issuers while earning a yield that is anticipated to move as short-term interest rates change,” says Ken McCord, president of AlphaPro. “This is the third ETF we’ve launched that is sub-advised by Natcan. They have done an excellent job in managing the Horizons AlphaPro Corporate Bond ETF and we expect the same level of exceptional portfolio management on this ETF as well as the recently launched Horizons AlphaPro Preferred Share ETF.”