Horizons ETFs Management has launched the Horizons Active Cdn Municipal Bond ETF (HMP), the first exchange traded fund (ETF) in Canada to provide diversified exposure to Canada's municipal bond market.
Units of the ETF will begin trading today on the Toronto Stock Exchange (TSX) in Canadian dollars under the ticker symbols HMP (Class E units) and HMP.A (Advisor Class units).
HMP is an actively managed ETF, sub-advised by Fiera Capital Corporation (Fiera Capital) that invests primarily in a portfolio of Canadian municipal bonds, denominated in Canadian dollars.
Municipal bonds, sometimes referred to as "munis," are debt securities generally issued by cities, municipalities or municipal finance authorities to finance local capital expenditures such as the construction of bridges, highways, airports or schools. The size of the market in Canada is approximately CAD40 billion, with Quebec municipalities making up nearly half of the issues. Currently, non-rated municipal bonds, which have not been rated by a third-party credit rating agency, represent approximately CAD16 billion or 40 per cent of the market.
"Municipal bonds offer investors an attractive risk-return profile because they have a low risk of default but are higher yielding than other types of Canadian government and provincial bonds," says Howard Atkinson (pictured), President of Horizons ETFs. "Historically, retail investors could only get targeted exposure to municipal bonds by buying the individual issues. HMP is the first ETF in Canada that provides investors with direct access to a diversified Canadian municipal bond portfolio."
Up to 75 per cent of HMP's portfolio can be invested in non-rated Canadian municipal bonds.
Non-rated bonds are generally issued by midsize municipalities and offer a slightly higher yield than the rated-debt of larger Canadian cities. Fiera Capital undertakes an extensive independent credit analysis to find the most attractive opportunities among non-rated issues.
"As one of the largest municipal bond investors in Canada, Fiera Capital is thrilled to be working with Horizons on this novel, low-risk solution for Canadian retail investors," said François Bourdon, Chief Investment Solutions Officer at Fiera Capital. "Based on our solid track record in managing non-rated bonds, we see a tremendous opportunity in enhancing the yield of HMP's portfolio without increasing its risk. Our extensive independent credit analysis not only ensures that a municipality can meet its debt obligations, it also takes into account factors such as demographics and industries within a municipality in order to determine which issues to ultimately hold."
With over CAD50 billion in fixed income assets, Fiera Capital is a leader in bond investing and analysis.
"We are very excited to be expanding our products with Fiera Capital and making the muni-bond market accessible to all investors," added Mr. Atkinson. "We think their focus on independent credit analysis and liquidity management will give Canadian investors a leg-up on this often overlooked but growing asset class."
HMP closed the offering of its initial Class E and Advisor Class units and will begin trading today on the TSX when the market opens. About Fiera Capital Corporation (www.FieraCapital.com)
Fiera Capital Corporation is a leading publicly-traded, independent investment firm with offices in major financial centres across North America. As June 30, 2015, the firm had assets under management of approximately CAD90 billion. Fiera Capital offers a full array of traditional and alternative investment solutions for institutional, private wealth and retail clients, as well as a proactive and tactical asset allocation process. In the U.S, asset management services are provided by Fiera Capital's U.S. subsidiaries, Bel Air Investment Advisors LLC and Wilkinson O'Grady & Co., Inc. For more information, visit www.fieracapital.com.
About Horizons ETFs Management (Canada) Inc. (www.HorizonsETFs.com)
Horizons ETFs Management (Canada) Inc. and its affiliate AlphaPro Management Inc. are innovative financial services companies offering the Horizons ETFs family of exchange traded funds. The Horizons ETFs family includes a broadly diversified range of investment tools with solutions for investors of all experience levels to meet their investment objectives in a variety of market conditions. Horizons ETFs has more than CAD5.1 billion of assets under management and with 68 ETFs listed on the Toronto Stock Exchange (as at August 13, 2015), the Horizons ETFs family makes up one of the largest families of ETFs in Canada. Horizons ETFs Management (Canada) Inc. and AlphaPro Management Inc. are members of the Mirae Asset Global Investments Group.
Horizons ETFs is a member of Mirae Asset Global Investments. Commissions, management fees and applicable sales taxes all may be associated with an investment in the exchange traded funds managed by Horizons ETFs Management (Canada) Inc. (the "ETFs"). The ETFs are not guaranteed, their values change frequently and past performance may not be repeated. The prospectus contains important detailed information about the ETFs. Please read the prospectus before investing.
Certain statements contained in this news release constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to a future outlook and anticipated distributions, events or results and may include statements regarding future financial performance. In some cases, forward-looking information can be identified by terms such as "may", "will", "should", "expect", "anticipate", "believe", "intend" or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Horizons ETFs undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law.
