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Horizons ETFs reduces management fees on two ETFs

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Horizons ETFs Management has reduced the management fee on the Horizons S&P/TSX Capped Energy Index ETF (HXE) and the Horizons S&P/TSX Capped Financials Index ETF (HXF) to 0.25 per cent from 0.35 per cent, effective 1 April 2017.

HXE seeks to replicate, to the extent possible, the performance of the S&P/TSX Capped Energy Index (Total Return), net of expenses. The S&P/TSX Capped Energy Index (Total Return) is designed to measure the performance of Canadian energy sector equity securities included in the S&P/TSX Composite Index. The relative weight of any single index constituent security is capped.
 
HXF seeks to replicate, to the extent possible, the performance of the S&P/TSX Capped Financials Index (Total Return), net of expenses. The S&P/TSX Capped Financials Index is designed to measure the performance of Canadian financial sector equity securities included in the S&P/TSX Composite Index. The relative weight of any single index constituent security is capped.
 
"HXE and HXF were already the lowest-cost ETFs in Canada offering exposure to the S&P/TSX Capped Energy Index and S&P/TSX Capped Financials Index, respectively. Now with management fees of only 25 basis points, these two ETFs are less than half the cost of the leading competitor ETFs that track these same or similar indices," says Steve Hawkins, co-CEO and president of Horizons ETFs. "Typically, a passive index ETF will not generate a return that is higher than the index it replicates, so the lower the fee to get that index exposure, the better the performance should be versus a higher fee ETF that tracks the same index."
 
HXE and HXF have significant after-tax advantages due to their total return structure. HXE and HXF use Horizons ETFs' total return index (TRI) structure to provide tax-efficient exposure to the total returns of their respective indices.
 
TRI ETFs are low-cost, index-replicating ETFs that use a synthetic replication structure to receive the pre-tax total return of an index. Unlike physically-replicated ETFs, no distributions are expected to be paid by the ETF. Instead, the value of any dividend or interest income is directly reflected in the performance of the ETF. This leads to greater tax efficiency for investors who hold the ETF in non-registered investment accounts. In addition, the potential for tracking error is also reduced in TRI ETFs since there are no portfolio trading costs.
 
"We think the combination of industry-low fees and significant after-tax advantages, make HXE and HXF very compelling ETFs to use for passive index exposure to energy and financial stocks, the two largest sectors in Canada," says Hawkins.

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