Horizons Active Diversified Income ETF - HAA

ETF Overview

The investment objective of the fund is to provide a consistent rate of return balanced between current income and long-term capital growth.

The ETF invests primarily in a balanced portfolio of publicly traded equity, income trust and debt securities located primarily in Canada.

In order to obtain direct or indirect exposure to these securities, the ETF may invest in exchange traded funds and exchange traded notes.

The ETF, to the best of its ability, seeks to hedge its non-Canadian dollar currency exposure to the Canadian dollar at all times.

Additional Fund Information

To achieve Horizons HAA's investment objectives, the Investment Manager uses quantitative and technical research to substantially allocate the portfolio among equity securities, debt securities, income trust securities and alternative investments.

Between 60% and 80% of the portfolio of the ETF is generally invested in equity and equity related securities and between 20% and 40% of the ETF's portfolio is generally invested in corporate bonds, government debt and fixed-income securities.

Generally, no less than 70% of the ETF's portfolio will be invested in Canadian equity and equity related securities or Canadian dollar denominated debt.

Active Management

This fund has an active management mandate ( A minority of ETFs have an active investment management mandate or a degree of active investment management. Full active management involves an investment manager actively managing the fund - deciding which securities to buy/sell, and when etc. However, many 'active' ETFs employ only partial active investment management, not full. ), not passive ( Most ETFs are passively managed - they have no active investment management. Passive ETFs simply try to replicate the returns of an index as closely as possible, such as the S&P/TSX 60 Index. ).

The fund's benchmark ( Most actively managed funds have a benchmark. The fund manager typically aims to exceed the performance of that benchmark. ) is:

None stated

Key ETF Data

Fundamentals
Category (main)	Active Global (mostly North American) Multi-asset classes: Corporate (investment grade & non-investment grade)
Category (other)	Equity and Fixed Income (Gov & Corp: investment grade and non-investment grade)
Underlying Index	No Index
ETF Structure	Active management. No index
Asset Class	Multi-asset classes
Sub-Asset Class	Equity and Fixed Income (Gov & Corp: investment grade and non-investment grade)
Region	Global (mostly North America) *
Issuer	Horizons ETFs (Canada)
ETF Home Page	Available here

* Mostly via TSX-traded Horizon ETFs & ETNs

Fund Facts
Inception Date	July 28, 2010
Total Holdings	Unknown
Distribution Frequency	Quarterly
Leverage	None
Significant Currency Exposure	Yes
Currency Hedging	Yes

Fees
Management Fee	0.70%
Management Expense Ratio (MER)	1.04% *

* 2011 MER, 2010 (0.99%)

Trading Information
Ticker	HAA
Exchange	TSX (Toronto Stock Exchange)
Currency	CAD

Eligibility
Eligibility *	RRSP, RRIF, RESP, TFSA, DPSP, RDSP
DRIP available **	Yes
PACC Plan available **	Yes
SWP available **	Yes

* Always check eligibility with your plan operator as plans and accounts can differ

** Not all brokers can facilitate these plans. Check with your broker.

Current Price, Fund Performance, Yield, NAV, Charts etc

To view the TSX or Morningstar fund page for this ETF click on the Fund Data menu tab or below:

ETF Analysis

Bonds/fixed income funds should be an important component in most investment portfolios. The general rule of thumb is that you should have the percentage equivalent in bonds as per your age. So if you are 30, your portfolio should comprise 30% bonds/fixed income funds.

However the bond markets are in near unprecedented territory. Years of central bank stimulus packages and ultra-low interest rates since 2008's Financial crisis have created a massive bubble.

Many analysts including Peter Boockvar, managing director and chief market analyst at The Lindsey Group, agree. He stated in July 2016 that the bond market is in an ‘epic bubble of colossal proportions’.

Until the buddle bursts, we cannot recommend buying bonds/fixed income funds.

If you absolutely have to buy bonds/fixed income funds then ensure you always check the Yield To Maturity (YTM), also known as the Weighted Average Yield To Maturity.

The YTM is much more important than the bond's current yield (also called the current distribution yield).

The YTM (unlike current yield) considers not only the coupon income, but any capital gain or loss that an investor will realize by holding the bonds to maturity. It also considers reinvestment of the coupons.

Unfortunately the frothy bond market has meant many fixed income ETFs have had to purchase many bonds at a premium. An ultra-low rate environment and purchasing bonds at a premium makes for a particularly terrible climate for income seekers, and new fixed income investors.

Protect yourself by understanding YTM and checking the YTM of any fixed income security you are considering purchasing. Also understand quality ratings, duration and maturities.

Be particularly aware of fund fees. What is the fund's MER ()? An MER of 0.40% may not sound like much but fixed income funds are supposed to be less risky than equities (bond market bubbles such as the current one excepted) so their returns are typically considerably less. Consequently an MER of 0.40% may actually be a significant portion of any investment return from a bond/fixed income fund. Bond ETFs with sub 0.20% MERs are available.