Hamilton Capital has launched the Hamilton Capital Australian Financials Yield ETF (HFA CN) on Toronto Stock Exchange.
The fund targets a total yield of 6.5% by investing in Australian financials and utilizing a covered call overlay.
The actively managed fund seeks long-term returns consisting of regular dividend income and modest capital growth through investing in the equities of Australian financial services companies. Currency exposure is hedged back to the Canadian dollar.
“We are very excited to launch HFA, which is intended to provide investors with exposure to a world-class financial services sector with a history of long-term outperformance versus Canadian financials,” said Rob Wessel, Managing Partner at Hamilton Capital.
Wessel continued, “Australia is also home to some of the world’s best-capitalized banks, which outperformed their Canadian peers during the global financial crisis. With a portfolio of high dividend yielding stocks, HFA is well suited, in our opinion, for investors seeking attractive monthly dividends and portfolio diversification from a group of companies operating in one of the world’s most successful economies.”
HFA targets an ambitious total yield of 6.5% and will utilize covered call strategies in a bid to meet this target. A covered call is an options strategy whereby an investor holds a long position in an asset and sells or “writes” call options on that same asset in an attempt to generate more income (the additional income from option premium) than the asset would otherwise provide on its own from dividends or other distributions.
Horizons ETFs Canada will act as sub-advisor to HFA solely for the writing of covered call options on its portfolio securities. Horizons offers a range of covered call strategies including US, international, and sector-specific equity ETFs.
The fund comes with a management expense ratio (MER) of 0.65%.
The fund is the fifth ETF to be offered by Hamilton Capital. The other funds include the Hamilton Capital Global Bank ETF (HBG CN), the Hamilton Capital US Mid-Cap Financials ETF (HMFU CN), and the Hamilton Capital Global Financials Yield ETF (HFY CN), each of which house around C$70m. The Hamilton Capital Canadian Bank Variable-Weight ETF (HCB CN) has just C$10m.