Horizons ETFs has announced a reduction in the management fee of its Horizons China High Dividend Yield Index ETF. It has also declared plans to eliminate all advisor-class units of its Canadian-listed ETFs.
The management fee for the Horizons China High Dividend Yield Index ETF (HCN) has been cut from 0.85% to 0.7%. Providing exposure to high dividend-yielding Hong Kong-listed equity securities, the HCN seeks investment results that generally track the performance of the Hang Seng High Dividend Yield Index, before expenses and fees. The Hang Seng HD Index is designed to measure the performance of the Hang Seung Stock Exchange’s 50 highest dividend-yielding equity securities, which are chosen for liquidity, dividend-paying track record, and low one-year volatility.
Advisor-class units of Horizons ETFs are a specific class of ETFs, denoted by “.A” or “.V,” that pay a service fee to financial professionals who have purchased them for clients. By Jan. 31, they will no longer be available for purchase by investment professionals; by the end of April, they are expected to be eliminated fully.
“We launched advisor-class units in Canada within our suite of actively managed ETFs as a bridge to allow commission-based investment professionals to embrace ETFs and transition away from mutual funds with service fees,” said Horizons ETFs President and Co-CEO Steven J. Hawkins. “Increasingly, we've found that commission-based investment advisors who have become ETF investors have tended to transition to fee-based accounts as well, and we expect this will be a long-term trend in the Canadian investment industry. As a result, we think there will be less need in the future for investment funds, particularly ETFs, to offer embedded compensation to investment professionals.”
Advisor-class units offered by Horizons ETFs currently pay a quarterly trailer of 0.75% for equity-focused ETF mandates and 0.50% for fixed-income-focused ETF mandates. The firm plans to cut the annual management fee on advisor-class units by an amount equal to the applicable trailer on or about April 28.
Either concurrently or as soon as reasonably practicable afterward, all advisor-class units will be converted to common class units of the same ETF, subject to regulatory and third-party approvals. The conversion will not negatively affect unitholders’ financial interests or rights, and no action is needed from unitholders to participate in the trailer elimination or units conversion.
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