Four new ETFs added to the Asset Allocation Suite complete Horizons ETFs’ traditional exposure offerings and introduces covered call and lightly leveraged options
TORONTO – October 11, 2023 – Horizons ETFs Management (Canada) Inc. (“Horizons ETFs” or the “Manager”) is pleased to announce the launch of four new ETFs within its asset allocation suite (the “Asset Allocation ETFs”), as well as two ETFs within its Equity Essentials suite (the “Equity Essentials ETFs”), all described below:
New ETFs in Asset Allocation Suite
- Horizons Enhanced All-Equity Asset Allocation ETF (“HEQL”), which provides 1.25 times leverage (“1.25x”) exposure to an all-equity asset allocation portfolio.
- Horizons Growth Asset Allocation Covered Call ETF (“GRCC”), a covered call approach to asset allocation investing.
- Horizons Enhanced All-Equity Asset Allocation Covered Call ETF (“EQCL”), which combines enhanced and covered call exposures in an all-equity asset allocation portfolio.
- Horizons Growth Asset Allocation ETF (“HGRW”), the final ‘traditional’ exposure choice for Horizons ETFs’ asset allocation suite.
New ETFs in Equity Essentials Suite
- Horizons Enhanced NASDAQ-100 Covered Call ETF (“QQCL”) which provide 1.25x and covered call exposure to the NASDAQ-100®.
- Horizons Enhanced Canadian Oil and Gas Equity Covered Call ETF (“ENCL”), which provide 1.25x and covered call exposure to Canadian Oil & Gas companies.
In Canada, asset allocation ETFs hold more than $19 billion in total assets under management, representing approximately 5% of overall Canadian ETF assets. Since 2018, the category has experienced an asset growth of 50% annually, highlighting the popularity of asset allocation strategies among investors.
Committed to innovation, the newest additions to the Asset Allocation Suite further offer unique options for investors to tailor their exposure through 1.25x leverage and covered call overlays, which have the potential to boost monthly income and magnify returns.
“The demand for accessible asset allocation options to strengthen and diversify portfolios is clear, and we are responding to the needs of Canadian investors by bringing more choice to an ETF category that has largely been limited to three options: conservative, balanced and growth,” said Rohit Mehta, President and CEO of Horizons ETFs. “You’ve asked, we’ve listened: the launch of these new ETFs means that Canadian investors can decide how they want to tailor their asset allocation exposure with Horizons ETFs, including if they’re looking for the potential of more income, greater growth potential or a mix of both.”
The following table outlines the four new Asset Allocation ETFs from Horizons ETFs:
| ETF Name and Ticker | Investment Objective | Target Leverage Ratio | Mgmt |
| Horizons Growth Asset Allocation ETF (“HGRW”) | HGRW seeks to provide a combination of long-term capital growth and a modest level of income, primarily by investing in exchange traded funds that provide exposure to a globally diversified portfolio of equity and fixed income securities. | Not Leveraged | 0.18% |
| Horizons Enhanced All-Equity Asset Allocation ETF (“HEQL”) | HEQL seeks to provide enhanced long-term capital growth, primarily by investing, directly or indirectly, in exchange traded funds that provide exposure to a globally diversified portfolio of equity securities.HEQL will also employ leverage (not to exceed the limits on use of leverage described under “Investment Strategies”) through cash borrowing and will generally endeavour to maintain a leverage ratio of approximately 125%. | 1.25x | 0.45% |
| Horizons Growth Asset Allocation Covered Call ETF (“GRCC”) | GRCC seeks to provide a combination of a high level of income and moderate long-term capital growth, primarily by investing in exchange traded funds that provide exposure to a globally diversified portfolio of equity securities. To mitigate downside risk and generate premiums, GRCC will be exposed to a dynamic option writing program. | Not Leveraged | 0.49% |
| Horizons Enhanced All-Equity Asset Allocation Covered Call ETF (“EQCL”) | EQCL seeks to provide a combination of a high level of income and long-term capital growth, primarily by investing, directly or indirectly, in exchange traded funds that provide exposure to a globally diversified portfolio of equity securities. To generate premiums, EQCL will be exposed to a dynamic covered call option writing program.EQCL will also employ leverage (not to exceed the limits on use of leverage describe under “Investment Strategies”) through cash borrowing and will generally endeavour to maintain a leverage ratio of approximately 125%. | 1.25x | 0.75% |
*Plus applicable sales tax
How does 1.25x leverage work within Asset Allocation ETFs?
Among the four asset allocation ETFs launched today, two (HEQL and EQCL) employ leverage, a strategy that can potentially magnify gains and losses. These ETFs aim to generate approximately 1.25x the return of their underlying portfolio.
For HEQL and EQCL, Horizons ETFs creates leverage by using cash borrowing to invest, on a leveraged basis, in a related ETF managed by Horizons ETFs. To ensure risk is limited to the capital invested, HEQL and EQCL will be regularly monitored and seek to maintain a leverage ratio of approximately 125%, or 1.25x, of their net asset value.
“Enhancing an investment vehicle with a little leverage can go a long way – especially with a diversified, asset allocation strategy,” continued Mr. Mehta. “By taking an enhanced approach with our ETFs, investors are taking a high-conviction position on the long-term growth of global equity markets.”
How does a covered call overlay work within Asset Allocation ETFs?
Of the four asset allocation ETFs launched today, two – GRCC and EQCL – employ a covered call overlay, a unique investment strategy designed to generate additional income for a portfolio through option-writing. Covered Call ETFs typically seek to generate higher yields relative to asset allocation ETFs that do not employ option-writing, and may result in higher levels of monthly income for investors.
To achieve this, GRCC and EQCL utilize Horizons ETFs’ expertise in the field, and are exposed to a dynamic covered call option writing program on up to 50% of the values of their respective portfolios. While GRCC offers exposure to 80% equity to a 20% fixed income allocation, EQCL offers 100% equity exposure.
While seeking to provide hedging protection, risk mitigation and premiums, the use of a covered call strategy may, however, limit some of the potential gains available, making these strategies potentially best suited for investors seeking higher levels of income from their asset allocation portfolios.
“For investors looking for an opportunity to optimize returns while generating consistent monthly income at a higher level of yield, HEQL is an ETF that seeks to deliver that, plus the benefits of global markets and index exposure, within a single solution,” said Mr. Mehta.
Additional ETFs launched today: QQCL and ENCL
In addition to the Asset Allocation ETFs launched today, Horizons ETFs is also broadening its Equity Essentials suite, which offers investors multiple ways to optimize their risk exposure and performance potential with the three largest equity categories in Canada: Large-Cap Canadian Equity, Large-Cap U.S. Equity, and Canadian Financial Services Equity2.
Horizons ETFs has launched QQCL, which provides covered call and 1.25x exposure to the NASDAQ-100®, the technology-heavy major U.S. index.
As well, amid ongoing strength within Canada’s oil & gas sector, Horizons ETFs launched ENCL, which provides covered call and 1.25x exposure to the performance of an index of Canadian companies that are involved in the crude oil and natural gas industry.
The following table outlines the two new Equity Essentials ETFs from Horizons ETFs:
| ETF Name and Ticker | Investment Objective | Target Leverage Ratio | Mgmt Fee* | Initial Target Annualized Net Yield1 |
| Horizons Enhanced NASDAQ-100 Covered Call ETF (“QQCL”) | QQCL seeks to provide, to the extent reasonably possible and net of expenses: (a) exposure to the performance of an index of the largest domestic and international, non-financial companies listed on the NASDAQ stock market (currently, the NASDAQ-100® Index); and (b) high monthly distributions of dividend income and call option premiums. To generate premiums, QQCL will be exposed to a dynamic covered call option writing program.QQCL will also employ leverage (not to exceed the limits on use of leverage described under “Investment Strategies”) through cash borrowing and will generally endeavour to maintain a leverage ratio of approximately 125%. | 1.25x | 0.85% | 14.10% |
| Horizons Enhanced Canadian Oil and Gas Equity Covered Call ETF (“ENCL”) | ENCL seeks to provide, to the extent possible and net of expenses: (a) exposure to the performance of an index of Canadian companies that are involved in the crude oil and natural gas industry (currently, the Solactive Equal Weight Canada Oil & Gas Index); and (b) high monthly distributions of dividend income and call option premiums. To generate premiums, ENCL will be exposed to a dynamic covered call option writing program.ENCL will also employ leverage (not to exceed the limits on use of leverage described under “Investment Strategies”) through cash borrowing and will generally endeavour to maintain a leverage ratio of approximately 125%. | 1.25x | 0.85% | 16.20% |
*Plus applicable sales tax
“Since the launch of our Equity Essentials lineup, two particular exposures within the suite – the NASDAQ-100 and Canada’s oil & gas sector – have become increasingly at the forefront of investor attention, as confidence in technology companies returns and the price of oil increases,” said Mr. Mehta. “We’re excited to introduce these two ETFs into our Equity Essentials suite and provide investors with more opportunities to expand their exposure to these two key indices, while employing covered call strategies to potentially boost monthly income.”
To learn more and see the entire Horizons ETFs’ Asset Allocation suite, please visit www.horizonsetfs.com/asset-allocation. To learn more and see the entire Horizons ETFs’ Equity Essentials suite, please visit www.horizonsetfs.com/equity-essentials.
About Horizons ETFs Management (Canada) Inc. (www.HorizonsETFs.com)
Horizons ETFs Management (Canada) Inc. is an innovative financial services company with one of the largest suites of exchange traded funds in Canada. The Horizons ETFs product family includes a broadly diversified range of solutions for investors of all experience levels to meet their investment objectives in a variety of market conditions. Horizons ETFs currently has more than $27 billion of assets under management and 119 ETFs listed on major Canadian stock exchanges. Horizons ETFs is a wholly owned subsidiary of the Mirae Asset Financial Group, which manages approximately $710 billion of assets across 13 countries around the world.
Investor inquiries:
Contact Horizons ETFs at 1-866-641-5739 (toll-free) or (416) 933-5745
[email protected]
Media inquiries:
Contact Naseem Husain
Senior Vice President, ETF Strategist
Horizons ETFs Management (Canada) Inc.
[email protected]
Categories: News, Press Releases
Topics: Covered Calls, Distributions, Income