Horizons ETFs Management (Canada) and its affiliate AlphaPro Management have launched the Horizons Active Floating Rate Senior Loan ETF (HSL).
The senior secured floating rate loan exchange-traded fund alternative to high yield bonds will offer some protection from potential rising interest rates.
Class E units and Advisor Class units of HSL are now trading on the Toronto Stock Exchange (TSX).
HSL seeks to provide unitholders with a high level of current income by investing primarily in a diversified portfolio of US senior secured floating rate loans, which are generally rated below investment grade (loans rated at or below BB+ by Standard & Poor's, or a similar rating by a designated rating organisation) and debt securities, with capital appreciation as a secondary objective. HSL will seek to hedge its non-Canadian dollar currency exposure to the Canadian dollar at all times.
"In today's low interest rate environment, income investors should be aware of how potential interest rate increases could impact the value of their bond portfolios," says Howard Atkinson, president of Horizons ETFs. "Since senior loan prices are generally not impacted as negatively by rising interest rates as traditional bonds, HSL can be considered a diversification tool for fixed income investors that may help offset some of their interest rate risk."