Horizons Active Cdn Bond ETF - HAD

ETF Overview

The investment objective of Horizons HAD is to seek long-term returns primarily through maximized interest income and moderate capital appreciation.

Horizons HAD invests primarily in a portfolio of high-quality Canadian fixed income securities denominated in Canadian dollars including government and corporate bonds.

To achieve Horizons HAD's investment objectives, the ETF's Sub-Advisor uses research on Canadian economic conditions and their impact on interest rates to select fixed income securities that, based on the Sub-Advisor's view, are believed to offer superior risk adjusted returns relative to passively managed Canadian bond indices.

When the Sub-Advisor believes that interest rates will increase, the Sub-Advisor may choose securities with shorter terms and when the Sub-Advisor believes that interest rates will decrease, the Sub-Advisor may choose securities with longer terms.

Horizons HAD will be substantially invested at all times in a portfolio primarily composed of Canadian federal and provincial government bonds, Canadian corporate bonds and municipal bonds.

Horizons HAD may also from time-to-time invest in foreign government, foreign government-backed and corporate bonds denominated in Canadian dollars and certain high quality asset-backed securities.

Horizons HAD will not invest in bonds denominated in currencies other than the Canadian Dollar.

Horizons HAD may from time to time also use both long and short futures contracts and forwards to manage its duration objective and hedge any resulting non-Canadian currency exposure to the Canadian Dollar.

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 Canadian Fixed Income: Government & Corporate (investment grade)
Underlying Index	No Index
ETF Structure	Active management. No index
Asset Class	Fixed Income - Government & Corporate (investment grade)
Region	Canada
Issuer	Horizons ETFs (Canada)
ETF Home Page	Available here

Fund Facts
Inception Date	Oct 10, 2010
Total Holdings	Unknown
Distribution Frequency	Monthly
Leverage	None
Significant Currency Exposure	No
Currency Hedging	-

Fees
Management Fee	0.42%
Management Expense Ratio (MER)	Unknown *

* Not available yet

Trading Information
Ticker	HAD
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.