New Horizons ETF provides exposure to China's dividend-payers

Jess Morgan 12 January, 2016 | 6:00PM

As world markets continue to tumble under the pressure of Chinese volatility, one ETF provider has introduced a fund offering direct exposure to the country's dividend-payers.

Horizons China High Dividend Yield Index ETF opened for trading on Jan. 12 on the Toronto Stock Exchange, under the ticker symbol HCN, with a management fee of 0.85%.

The ETF seeks to replicate the performance of Hong Kong's Hang Seng High Dividend Yield Index, which lists a number of companies headquartered or with substantial business interests in mainland China.

This index screens large- and mid-cap Hang Seng-listed companies based on three factors: liquidity, a track record of dividend payments, and minimal volatility over a one-year period.

Noting that China's economy is projected to grow at a rate of 6% to 8% over the next several years, Horizons ETFs co-CEO Steve Hawkins says HCN provides an opportunity for Canadian investors to capitalize on the changing dynamics of China's economy.

"By investing in top dividend-paying companies listed on the Hong Kong Stock Exchange," says Hawkins, "investors are not only getting timely exposure to Chinese companies with consistent dividend yields, but are also getting the added benefit of Hong Kong's modern market reforms, regulatory oversight and structure."

HCN's top holdings include Evergrande, a property developer based in Guangzhou; Pacific Textiles, a Hong Kong-headquartered fabric manufacturer; and Li & Fung, a global supply chain manager for major U.S. and European retailers.

About Author

Jess Morgan

Jess Morgan  Jess Morgan is the associate editor of Morningstar Canada’s website. She began her career as a television producer and freelance writer, often making appearances on TV and radio as a commentator on politics and culture. She holds a BA in communications from the University of Winnipeg and a diploma in Creative Communications from Red River College.