Horizons Exchange Traded Funds Inc has launched three new commodity exchange traded funds which will allow investors to earn a tax-efficient monthly income from exposure to crude oil, natural gas and silver.
Horizons ETFs is the first ETF provider in Canada to offer exchange traded funds that utilise an innovative covered call strategy on commodities. The three new Horizons commodity yield exchange traded funds (the "Commodity Yield ETFs" or "ETFs") allow investors to gain exposure to a commodity asset class while earning a tax-efficient monthly income.
The ETFs will begin trading today on the Toronto Stock Exchange ("TSX") under the below ticker symbols with both Class E units and Advisor Class units.
Horizons Silver Yield ETF ("HZY") will seek is to provide its unitholders with: (i) exposure to the price of silver bullion hedged to the Canadian dollar, less the ETF’s fees and expenses; (ii) tax-efficient monthly distributions; and (iii) in order to mitigate downside risk and generate income, exposure to a covered call option writing strategy on 33% of the invested portfolio.
The Horizons Crude Oil Yield ETF ("HOY") will provide its unitholders with: (i) exposure to the price of crude oil futures hedged to the Canadian dollar, less the ETF’s fees and expenses; (ii) tax-efficient monthly distributions; and (iii) in order to mitigate downside risk and generate income, exposure to a covered call option writing strategy on 33% of the invested portfolio.
The Horizons Natural Gas Yield ETF ("HNY") will provide its unitholders with: (i) exposure to the price of natural gas futures hedged to the Canadian dollar, less the ETF’s fees and expenses; (ii) tax-efficient monthly distributions; and (iii) in order to mitigate downside risk and generate income, exposure to a covered call option writing strategy on 33% of the invested portfolio.
"Investing in commodities such as oil, gas and precious metals can offer several advantages to a portfolio. Among them are diversification, growth potential and inflation protection. However, commodities by their nature have never been unable to offer one investing staple … income," says Howard Atkinson, CEO of Horizons ETFs. "These new ETFs will give investors the best of both worlds: exposure to each underlying commodity and tax-efficient income."
These new ETFs increase the number of commodity yield exchange traded funds offered by Horizons ETFs to four. The Horizons Gold Yield ETF converted from a closed-end fund on February 27, 2012 and began trading under the ticker symbols HGY and HGY.A on 28 February, 2012.
The Horizons Gold Yield ETF seeks to provide its unitholders with: (i) exposure to the price of gold bullion hedged to the Canadian dollar, less fees and expenses; (ii) tax-efficient monthly distributions; and (iii) in order to mitigate downside risk and generate income, exposure to a covered call option writing strategy on 33% of the invested portfolio.
Horizons Investment Management Inc. ("HIMI"), an affiliate of AlphaPro, the manager of the ETFs, will act as investment advisor. Eden Rahim, Vice-President and Options Strategist forms part of the HIMI investment team providing the portfolio management services to the ETFs.
"Eden and his team have done a great job running our Covered Call ETFs which have raised more than $500 million of new assets in the last year," says Atkinson. "In our view, Eden has established himself as one of Canada’s preeminent covered call experts."
