Horizons Active High Yield Bond ETF - HYI

ETF Overview

The fund's (the "ETF") investment objectives are to provide unitholders with:

high total return income
monthly distributions

The ETF invests, directly or indirectly, primarily in high-yield debt securities of North American companies.

The ETF may also invest, directly or indirectly, in convertible debentures, preferred shares and mortgage back securities.

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

Additional Fund Information

To achieve ETF's investment objectives, the ETF's Sub-Advisor will use fundamental credit research to select companies that, based on the Sub-Advisor's view on the company's industry and growth prospects, are believed to offer attractive risk adjusted returns.

The Sub-Advisor may, from time to time, invest the ETF in investment grade debt, convertible debentures, preferred shares, mortgage back securities, Canadian and foreign government debt, Fixed Income ETFs including fixed income related exchange traded funds managed by the Manager or its affiliates, cash and cash equivalents which generally in aggregate will not exceed 40% of the ETF's net assets.

The Sub-Advisor may sell short debt securities it believes will underperform on a relative basis or to otherwise assist the ETF in meeting its investment objectives.

In lieu of specific security selections, from time to time the Sub-Advisor may purchase fixed income related exchange traded funds including those managed by the Manager or its affiliates.

The ETF may also use inverse ETFs as well as both long and short derivative instruments, including future contracts and credit default swaps, to manage duration, credit exposure, portfolio yield, market risk and currency risk.

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 North American Fixed Income: Corporate (mostly non-investment grade)
Underlying Index	No Index
ETF Structure	Active management. No index
Asset Class	Fixed Income
Sub-Asset Class	Corporate (mostly non-investment grade)
Region	North America
Issuer	Horizons ETFs (Canada)
ETF Home Page	Available here

Fund Facts
Inception Date	Feb 15, 2012
Total Holdings	Unknown
Distribution Frequency	Monthly
Leverage	None
Significant Currency Exposure	Yes
Currency Hedging	Yes

Fees
Management Fee	0.50%
Management Expense Ratio (MER)	Unknown *

* Not available yet

Trading Information
Ticker	HYI
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.