Horizons ETFs launches new tax-efficient exchange traded fund

By The IJ Staff | February 27 2019 09:30AM

Horizons ETFs Management (Canada) launched on Feb. 27 the Horizons Laddered Canadian Preferred Share Index ETF. Units of the ETF have begun trading on the TSX under the ticker symbol HLPR.

HLPR is the newest addition to the Horizons Total Return Index ETF suite. These ETFs use a 'total return swap' investment structure with the aim of delivering returns in a tax-efficient manner, says the company.

HLPR aims to replicate the performance of the Solactive Laddered Canadian Preferred Share Index, net of expenses. The Index composition is made up of Canadian preferred shares that generally have an adjustable dividend rate.

HLPR is not expected to pay any taxable distributions. “While the underlying preferred shares in the Index pay a dividend, HLPR uses a synthetic structure where the value of any dividend payments in the Index are reflected in the net asset value of the ETF, but never typically paid out,” says the company.

"ETFs have been a popular strategy for investors seeking access to preferred shares because they offer a one-ticket solution to the complexities and illiquidity of investing in this asset class," said Steve Hawkins, President and CEO of Horizons ETFs. "With HPR, Horizons ETFs has already established itself as a leading provider of preferred share ETF solutions in the Canadian marketplace. HLPR is simply a new preferred share offering that is well-suited in taxable accounts, since it is not expected to pay out any taxable distributions."