HORIZONS ETFs LAUNCHES CANADA'S FIRST ULTRA SHORT-TERM CANADIAN AND U.S. T-BILL ETFs
New ETFs offer monthly income backed by the creditworthiness of the Canadian and U.S. federal governments
TORONTO, April 14, 2023 /CNW/ - Horizons ETFs Management (Canada) Inc. ("Horizons ETFs" or the "Manager") is pleased to announce the launch of two new ETFs: the Horizons 0-3 Month T-Bill ETF ("CBIL"), and the Horizons 0-3 Month U.S. T-Bill ETF ("UBIL.U" and together, the "ETFs"). Units of the ETFs will begin trading today on the Toronto Stock Exchange ("TSX").
CBIL and UBIL.U are the first ETFs in Canada to provide respective exclusive exposure to Canadian and U.S. short-term federal Treasury Bills ("T-Bills"): federal government securities with maturities of one year or less. Across the fixed-income spectrum, T-Bills are generally considered to be amongst the lowest-risk investments available to investors, given that they are short-term securities backed by the creditworthiness of large federal governments.
ETF Name |
Ticker |
Investment Objective |
Management Fee* |
Initial Target Annualized Net Yield |
Horizons 0-3 Month T-Bill ETF |
CBIL |
CBIL seeks to provide interest income through exposure to Government of Canada Treasury Bills with remaining maturities generally less than 3 months. |
0.10 % |
4.23 % |
Horizons 0-3 Month U.S. T-Bill ETF** |
UBIL.U |
UBIL.U seeks to provide interest income through exposure to U.S. Treasury Bills with remaining maturities generally less than 3 months. |
0.12 % |
4.25 % |
*Plus applicable sales taxes.
** Trades in U.S. dollars.
The ETFs will distribute the net income they generate from their T-Bill holdings to unitholders on a monthly basis. In doing so, the ETFs are anticipated to generate interest income that is in line with the yield on their respective short-dated T-Bills.
"During volatile markets, factors like credit risk and term-to-maturity can be crucial considerations when building a resilient portfolio," said Jasmit Bhandal, Interim President and CEO of Horizons ETFs. "Short-term treasuries, like the ones held in CBIL and UBIL.U, can offer investors consistent monthly income, backed by the creditworthiness of the Canadian and U.S. federal governments."
While T-Bills are available for public purchase, direct investment can potentially result in additional costs, like commissions, as well as requiring additional management to roll and purchase new T-Bills to maintain a desired exposure. With CBIL and UBIL.U, investors do not need to undertake any manual management, as the ETFs handle these processes while maintaining their respective maturity exposures between 0 to 3 months.
Unlike other savings vehicles, like Guaranteed Investment Certificates ("GICs") or High-Interest Savings Accounts, which typically have minimum holding periods or investment amounts, CBIL and UBIL.U can be purchased or sold anytime throughout the trading day. These ETFs also provide a comparable yield, with the initial target annualized net yield at launch for CBIL expected to be 4.23% and UBIL.U at 4.25%.
"Increasingly, investors are seeking ways to hold cash in their portfolio, while taking advantage of higher interest rates to generate higher levels of income., said Jasmit Bhandal. "In our view, CBIL and UBIL.U provide exposure to very low-risk assets that provide investors with viable Canadian and U.S. dollar cash alternatives that offer both safety and an attractive monthly income."
While CBIL and UBIL.U are not covered by the Canada Deposit Insurance Corporation or the Federal Deposit Insurance Corporation in the U.S., T-Bills are respectively backed by the Government of Canada and the U.S. Government; neither of which have ever defaulted on their debt obligations. CBIL is offered in Canadian dollars, while UBIL.U is only offered in U.S. dollars.
The ETFs closed their initial offering of units to their designated broker and will begin trading today on the TSX when the market opens this morning.
Horizons ETFs Management (Canada) Inc. is an innovative financial services company and offers 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 has more than $25 billion of assets under management and 108 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.
Commissions, management fees and expenses all may be associated with an investment in the Horizons 0-3 Month T-Bill ETF ("CBIL") and the Horizons 0-3 Month U.S. T-Bill ETF ("UBIL.U", and together, the "ETFs"), managed by Horizons ETFs Management (Canada) Inc. The ETFs are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the ETFs will be able to maintain their net asset value per security at a constant amount or that the full amount of your investment in the ETFs will be returned to you. Past performance may not be repeated. The prospectus contains important detailed information about the ETFs. Please read the prospectus before investing.
The amount of the monthly distributions of an ETF, and therefore the initial targeted annualized net yield and the ongoing annualized net yield of an ETF, may fluctuate based on market conditions, including changes to interest rates. There can be no assurance that an ETF will make any distribution in any particular period or periods. The Manager may, in its complete discretion, change the frequency of these distributions, and any such change will be announced by press release.
CBIL & UBIL.U may be susceptible to an increased risk of loss, including losses due to adverse events because fund assets are concentrated in a particular issue, issuer or issuers, country, market segment, or asset class. While U.S. Treasury and Canadian Treasury obligations are fully backed by the respective governments, such securities are nonetheless subject to credit risk (i.e. the risk that the issuing government may be, or be perceived to be, unable or unwilling to honour its financial obligations, such as making payments). For a full description of the associated risks, please refer to the funds' prospectus at www.horizonsetfs.com.
Certain statements may constitute a forward-looking statement, including those identified by the expression "expect" and similar expressions (including grammatical variations thereof). The forward-looking statements are not historical facts but reflect the author's current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking statements. These forward-looking statements are made as of the date hereof and the authors do not undertake to update any forward-looking statement that is contained herein, whether as a result of new information, future events or otherwise, unless required by applicable law.
SOURCE Horizons ETFs Management (Canada) Inc.
For investor inquiries: Contact Horizons ETFs at 1-866-641-5739 (toll-free) or (416) 933-5745, [email protected]; For media inquiries: Contact Jonathan McGuire, Assistant Vice President, ETF Strategy, Horizons ETFs Management (Canada) Inc.,(647) 289-3324, [email protected]
Share this article