Horizons launches high-interest savings ETF on TSX

Nov 8th, 2021 | By | Category: Fixed Income

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Toronto-headquartered Horizons ETFs has added a second cash savings ETF to its product line-up with the launch of the Horizons High Interest Savings ETF (CASH CN).

Horizons launches high-interest savings ETF on TSX

Horizons ETFs has launched a second high-interest savings ETF on the Toronto Stock Exchange.

The fund, which has been listed on the Toronto Stock Exchange, seeks to maximize monthly income while preserving capital and liquidity by investing primarily in high-interest deposit accounts with Canadian banks.

The fund provides investors with an ETF-based alternative to traditional savings vehicles, like guaranteed investment certificates (GICs) and high-interest savings accounts.

As an ETF, CASH provides daily liquidity for Canadian dollar-denominated cash holdings while seeking to offer a higher yield than other high-interest savings vehicles.

GICs and higher interest savings accounts typically require funds to be held on deposit for a fixed length of time.

The investment objective of the fund is similar to that of the Horizons Cash Maximizer ETF (HSAV CN), an ETF launched by Horizons in February 2020. Unlike HSAV, however, CASH will seek to pay out regular monthly distributions of income.

“Following the success of HSAV, which currently has more than $1.3 billion in assets under management, we’ve received demand for a cash savings ETF that pays out monthly distributions,” said Steve Hawkins, President and CEO of Horizons ETFs. “CASH has many of the same characteristics as HSAV; however, CASH is a traditional trust and has been designed to pay out monthly distributions instead of reinvesting them, the way HSAV does.”

In January of 2021, Horizons announced that HSAV would potentially look to cap new subscriptions once it exceeds $1.5 billion in assets under management.

A period of suspended subscriptions, if any, would not affect the ability of existing shareholders of HSAV to sell their shares in the secondary market at a price reflective of, or potentially greater than, its net asset value per share, assuming normal market conditions; however, the suspension of issuance of new shares would mean that HSAV could be expected to trade at a premium to the NAV.

CASH will provide ETF investors a comparable alternative to HSAV, if it is capped.

“We wanted to ensure that Canadian investors continue to have a compelling low-cost cash-savings ETF option if we have to close HSAV to new subscriptions,” said Hawkins.

“CASH, with its industry-low management fee of 0.08%, should allow our firm to continue to offer an attractive ETF option for investors looking to hold cash in their portfolio and earn a relatively attractive income compared to traditional bank savings accounts.”

Neither CASH nor HSAV is covered by the Canada Deposit Insurance Corporation or any other government deposit insurer.

Horizons ETFs has more than $20 billion of assets under management and 102 ETFs listed on major Canadian stock exchanges.

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