Horizons ETFs Management has launches the Horizons USD Cash Maximizer ETF on the Toronto Stock Exchange (TSX) under the ticker HSUV.U.HSUV.U seeks to generate modest capital growth by investing primarily in high-interest US dollar deposit accounts with Canadian banks. While any decision to pay dividends or other distributions is within the discretion of the Manager, HSUV.U is not currently expected to make any regular distributions, although the value of any interest earned will be reflected in the net asset value (NAV) of the ETF.
Similar to the Horizons Cash Maximizer ETF (HSAV) launched in February 2020, HSUV.U provides investors with an ETF-based alternative to traditional savings vehicles, like GICs and high-interest savings accounts, although neither HSAV nor HSUV.U are covered by the Canada Deposit Insurance Corporation or any other government deposit insurer. As an ETF, HSUV.U provides daily liquidity for US dollar-denominated cash holdings, while offering an interest rate that is expected to be competitive with other high-interest savings vehicles.
“Following the success of HSAV, we received significant demand for a US dollar version,” says Steve Hawkins, President and CEO of Horizons ETFs. “Many Canadians have significant US cash holdings. Whether they are business owners with US clients or snowbirds with property in the US, there is a large need for US cash savings vehicles. HSUV.U provides investors with exposure to a cash alternative, denominated in the world’s most popular currency, with daily liquidity, an interest rate that is competitive with other high-interest savings vehicles, and potential tax efficiency, if the ETF is held in a taxable account.”
HSUV.U is a class of shares in a corporate class structure that allows the ETF to deliver its returns in a tax-efficient manner. With this structure, the ETF will receive interest income in US dollars on its cash deposits and that value will be reflected in the daily NAV of the ETF. However, investors in HSUV.U are not expected to receive any taxable distributions from the ETF.
“As HSUV.U is not expected to pay out any distributions, this could significantly enhance the after-tax benefits of owning HSUV.U in a taxable account, particularly if interest rates increase, which would create a greater amount of taxable income,” says Hawkins.
