Horizons Launches Senior Loan ETF

By Andrew Rickard | October 16 2014 10:36AM

Horizons ETFs has launched a new exchange traded fund (ETF) that is focused on US senior loans. The company says the new fund is an alternative to investing in high yield bonds.

On October 15, the new Horizons Active Floating Rate Senior Loan ETF became available for purchase. The fund is sub-advised by the Montreal-based investment management firm AlphaFixe Capital and will be actively managed by Sébastien Rhéaume and Diane Favreau.

The fund will invest primarily in a diversified portfolio of U.S. senior secured floating rate loans that are generally rated below investment grade. Capital appreciation is a secondary objective of the fund, and to the best of its ability it will also seek to hedge its currency exposure to the Canadian dollar. The ETF trades on the Toronto Stock Exchange under the HSL ticker symbol. An advisor class version of the fund is also available, trading under HSL.A.

"The U.S. senior loan market is much larger than the Canadian corporate bond market, which means there is a sufficiently large universe of investments available to HSL," comments Howard Atkinson, president of Horizons ETFs. "It can be a compelling alternative to holding high yield bonds, particularly for investors who are interested in generating an attractive monthly income that will generally rise or fall with short-term interest rates."