Adjustments to annual management fees coincide with recent rise in ETF gross yields
Horizons ETFs Management (Canada) Inc. has announced fee adjustments to two of its ETFs.
The firm has reduced annual management costs for the Horizons High Interest Savings ETF (CASH), and eliminated the rebate on the Horizons Cash Maximizer ETF's (HSAV) annual management fee.
With a target management expense ratio of ten basis points (0.10%), the yearly management charge for CASH is being cut from fourteen basis points (0.14%) to ten basis points (0.10%) plus relevant sales taxes, and the current rebate of one basis point (0.01%) is being withdrawn.
With regard to HSAV, the five-basis point (0.05%) annual management fee rebate is being eliminated, increasing the effective management fee from thirteen to eighteen basis points (0.18% to 0.18%), plus any relevant sales taxes, with a target MER of eighteen basis points (0.18%).
By eliminating the rebate, HSAV's management cost and return on equity (MER) will be comparable to those of the Horizons USD Cash Maximizer ETF ("HSUV.U").
The annual management costs have been updated in response to recent increases in the gross yields of the ETFs. The gross yields on CASH and HSAV have risen this year to date from about 0.70% to 3.03% and 3.00%, respectively.
"After careful consideration, we have decided to permanently lower the management fee on CASH, while bringing HSAV's management fee in line with its USD denominated version, HSUV.U," said Steve Hawkins, President and CEO of Horizons ETFs.
"Amid an increasingly populated high interest savings ETF landscape, we have decided that reducing CASH's management fee is in the best interest of its investors. With HSAV, in recognition of recent yield increases, in addition to the unique tax efficiencies it can offer, we have removed the previous rebate," he added.
By primarily investing in high-interest deposit accounts with Canadian banks, CASH aims to boost monthly income for unitholders while protecting capital and liquidity.
HSAV and CASH have comparable investing goals. However, CASH's goal is to distribute income on a regular monthly basis. By investing largely in high-interest deposit accounts with Canadian banks, HSAV hopes to produce modest capital growth.
HSAV is not presently anticipated to make any regular payouts, but Horizons ETFs reserve the right to decide whether to pay dividends or other types of distributions.
HSUV.U invests largely in high-interest U.S. dollar deposit accounts with Canadian banks in an effort to produce modest capital growth. It’s not presently anticipated to make any regular distributions, though Horizons may choose to pay dividends or make other payments in the future.
After HSAV's NAV reached $2 billion this past February, Horizons ETFs announced a suspension of new subscriptions. New HSAV subscriptions are still not being accepted. Any resumption of HSAV subscriptions in the future will be publicized via press release and noted on the Horizons ETFs website.
"High interest savings ETFs have become a powerful tool for investors seeking a way to earn an attractive yield while maintaining a liquid cash position throughout periods of market volatility," said Hawkins.