Horizons ETFs Management has launched the Horizons Active US Dividend ETF (HAU), an actively managed ETF that invests in US dividend stocks with attractive yield and return opportunities.
Class E and Advisor Class units of HAU have begun trading today on the Toronto Stock Exchange (TSX).
HAU is an actively managed ETF that seeks to provide regular dividend income and modest long-term capital growth by investing in high-quality dividend paying US companies or companies with a substantial presence in the US At the discretion of its sub-advisor, HAU may hedge some or all of its non-Canadian dollar currency exposure back to the Canadian dollar.
Sub-advised by Guardian Capital LP (Guardian Capital), HAU uses Guardian's proprietary GPS Stock Selection Process, which targets dividend stocks that offer a combination of dividend growth, payout and sustainability to build a diversified portfolio that seeks to outperform the S&P 500 Index. Based in Toronto, Guardian Capital has assets under management of more than USD23 billion as at 31 December, 2014.
"We are very excited to be offering this new ETF that will employ the same award-winning approach used in HAZ to capture the opportunities for yield and growth we are seeing in the US dividend market," says Howard Atkinson, President of Horizons ETFs. "With strong balance sheets and excess cash flow, US companies are poised to grow dividends and potentially generate higher returns; this low-cost, actively managed ETF provides its investors with exposure to these compelling dividend opportunities."
Guardian's GPS approach differs from other dividend strategies in that it targets a diversified set of stocks with different growth and yield characteristics, which range from Dividend Achievers to Dividend Growers to Dividend Payers. Dividend Achievers are high growth, early stage companies with low dividend yields; Dividend Growers are steady growth companies with moderate yields; and Dividend Payers are mature, low growth companies that provide high dividend yields.
"By segmenting the US dividend market into these three categories, one of the big advantages of this mandate over other traditional US dividend strategies is the sector diversification beyond traditional 'dividend rich' sectors," says Atkinson. "HAU will have meaningful exposure to the US technology sector, which has historically been a key driver of US stock market performance, but not traditionally considered a 'dividend-rich' sector. We believe that this gives investors a good balance of dividend yield, while also giving them exposure to the performance of the broad US stock market."
Guardian Capital's Srikanth Iyer, Managing Director, Head of Systematic Strategies, and Fiona Wilson, Portfolio Manager, will take on lead portfolio management responsibilities for HAU. They are supported by Guardian Capital's Systematic Equities Investment Team, which is comprised of a number of experienced investment professionals who focus on both the quantitative and qualitative aspects of stock selection.
"The analysis of a company's cash flow and the way it uses its cash flow in a shareholder friendly manner will be, over the next decade, the most important criteria in evaluating performance," says Iyer. "As a result, companies previously not known for their dividends and cash flow, like the technology sector, will become the mainstays of strong balance sheets and sustainable dividend yields."
HAU has closed the offering of its initial Class E units and Advisor Class units and will begin trading today on the TSX when the market opens.