Horizons ETFs Management has launched the Horizons Tactical Absolute Return Bond ETF (HARB), with two different series of shares of the ETF now trading on the Toronto Stock Exchange (TSX) under the ticker symbols HARB (Total Return Series Shares) and HARB.J (Dividend Series Shares).HARB seeks to provide positive absolute returns with low volatility over a market cycle regardless of market conditions or general market direction. The ETF will tactically take long and short positions in North American and global debt instruments and derivatives across the credit spectrum. In respect of the Dividend Series Shares, the ETF will also seek to provide consistent income.
The ETF is sub-advised by DMAT Capital Management (DMAT Capital), a boutique portfolio management firm founded by Barry Allan, a renowned Canadian fixed income manager. Allan is the President, CEO and CIO of DMAT, and has over 38 years of industry experience running investment mandates across the full spectrum of the fixed income world, including government bonds, investment-grade bonds, high-yield bonds and distressed bonds.
“HARB is the first fixed income ETF offered by Horizons that is what we would refer to as a ‘liquid alternative.’ This is an ETF that will utilise a variety of long and short fixed income investment strategies to seek absolute returns regardless of the conditions of the capital markets,” says Steve Hawkins, President and CEO of Horizons ETFs. “With its ‘go anywhere’ mandate, backed by the experienced management of Barry Allan and his DMAT Capital team, HARB will seek to identify and target potential opportunities across the fixed income universe as markets move.”
The ETF was constructed within the Horizons ETF Corp, a corporate class mutual fund structure that allows HARB to deliver its returns in a tax-efficient manner. HARB is available in two different series of shares of ETFs: HARB:TSX, the Total Return Series Shares, and HARB.J:TSX, the Dividend Series Shares.
HARB, the Total Return Series Shares, is not expected to make regular distributions and is particularly advantageous if held in a taxable account, where tax on bond income distributions could potentially be in excess of 50% depending on the marginal rate of tax of the investor. HARB.J, the Dividend Series Shares, has an initial distribution rate target of 5.0% per annum, which are anticipated to be paid monthly, and may consist of dividends, capital gains and/or returns of capital.
The ETF can take long or short positions, using leverage up to three-times (300 per cent) of its net asset value, across a variety of North American and global income-producing instruments including but not limited to: government debt, corporate debt, preferred shares, fixed income derivatives, and other income-producing instruments, as part of a variety of sophisticated strategies.
“The fixed income landscape has changed substantially in 2020. To find appreciable yield, you need to be able to alter your duration, credit quality and liquidity to take advantage of all market conditions in real-time,” says Barry Allan, CEO of DMAT Capital. “The flexibility of HARB allows us to focus our portfolio positioning to seek to deliver the highest absolute and risk-adjusted return profile over the course of the investment cycle, while being able to respond and protect capital during periods of rising yields and widening spreads.”
