Horizons ETFs Management (Canada) has extended the four basis point (0.04 per cent) rebate on the annual management fee of the Horizons S&P/TSX 60 Index ETF (HXT), so that the effective annual management fee on HXT continues at three basis points (0.03 per cent), plus applicable sales taxes.
HXT’s published management expense ratio (MER) has remained at 0.03 per cent for every reported fiscal period beginning 1 January, 2016. With the extension of the rebate, HXT continues as the lowest-cost Canadian equity ETF. This rebate will remain in effect until at least 30 September 2019.
HXT seeks to replicate, to the extent possible, the performance of the S&P/TSX 60 Index (Total Return), net of expenses. The S&P/TSX 60 Index (Total Return) is designed to measure the performance of the large-cap market segment of the Canadian equity market.
“Recently, investors have witnessed a growing number of low-management fee ETFs on the market,” says Steve Hawkins, President and CEO of Horizons ETFs. “Eight years ago, we launched HXT as Canada’s lowest-cost ETF. We’re proud of our role in pioneering a trend that provides better value for investors while maintaining HXT’s status as the lowest-cost ETF in the country.”
HXT is Horizons ETFs’ oldest Total Return Index (TRI) ETF and largest in terms of assets under management (AUM). In August of 2018, HXT surpassed USD2 billion in AUM, joining only 10 other ETFs in Canada to have previously achieved that mark.
The investment structure of HXT involves agreements with multiple Canadian bank counterparties, which requires them to deliver to HXT the total return of the S&P/TSX 60 Index. Since the TRI structure does not require the purchasing of the underlying securities in the index, there are fewer portfolio management costs than a physically replicated ETF. Also, TRI ETFs provide the total return of the index, and as a result, no distributions are expected to be paid by these ETFs. This can provide greater tax efficiency for investors that hold the ETF in non-registered investment accounts.
“As a fund within our suite of TRI strategies, HXT’s value is enhanced by its tax-deferral advantages. In fact, HXT has not paid a single taxable distribution to its end unitholders since its inception in 2010,” says Hawkins. “For this reason, HXT continues to be a leading choice among investors for exposure to the sixty largest stocks listed on the Toronto Stock Exchange.”