Horizons ETFs has unveiled the Horizons Absolute Return Global Currency ETF (HARC:TSX), the first ETF in Canada that gives investors long and short exposure to various global currencies in one portfolio. It is also the first ETF on the TSX to use a four-letter ticker symbol.
Acting as sub-advisor to the fund is CIBC Management, whose currency investment team is one of the largest in North America in terms of AUM. As of Dec. 30, the team was managing around $28 billion in currency-related assets.
HARC will aim for positive absolute returns through various long and short exposures to certain global currencies. The fund will generally hold Canadian short-term securities, utilizing short-term financial instruments to obtain exposure to selected global currency markets.
“This is the second actively managed global currency ETF that we have launched with CIBC Asset Management
, a recognized leader in currency management,” said Horizons ETFs CEO Steve Hawkins. “HARC differs from [the first strategy] because it allows for shorting of currencies for which the Sub-Advisor has a negative outlook together with the typical use of notional leverage that goes along with a long/short investment vehicle.
“While this introduces an increase in overall portfolio risk, we believe the addition of these two features significantly increases the return potential for the strategy,” he added.
CIBC Management aims to achieve the investment objective through its proprietary active investment process that monitors more than thirty global currencies, allowing it to judge which currencies could strengthen or weaken on a relative basis. Fundamental analysis, macroeconomic analysis, and factor-based ranking are among the tools that CIBC uses.
“We think that a global currency strategy like HARC is an ideal way for investors to diversify their returns from traditional stocks and bonds,” Hawkins said. “We also believe this is particularly true in today's environment of global political uncertainty: One benefit of currency investing is that with each global political event, there are both winners and losers in the currency markets. HARC will seek to take advantage of these opportunities to generate excess returns.”
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