Horizons adds actively managed U.S. dividend ETF

Rudy Luukko 26 February, 2015 | 6:00PM
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An actively managed exchange-traded fund that invests in dividend-paying U.S. stocks is the newest addition to the Horizons family of ETFs.

Horizons Active U.S. Dividend, sub-advised by Toronto-based Guardian Capital LP, opened for trading on Feb. 25 on the Toronto Stock Exchange.

Guardian will employ a stock-selection process that focuses on dividend growth and the quality and sustainability of payouts. The aim is to build a sector-diversified portfolio that combines high-growth, steady-growth and mature companies.

The ETF's benchmark, which it seeks to outperform, is the S&P 500 Index. This reflects an emphasis on total return including dividends, rather than dividend income alone. For instance, the portfolio starts out with an overweight position in technology stocks, which as a group tend to pay below-average dividends.

In a release, ETF sponsor Horizons ETFs Management (Canada) Inc. said that at Guardian's discretion, some or all of its non-Canadian currency exposure may be hedged back to the U.S. dollar. The ETF's universe consists of U.S. companies or companies with a substantial presence in the U.S.

Paying monthly distributions, the ETF has two share classes. One is Class E (HAU/TSX), which charges a management fee of 0.7%. The other is Advisor Class (HAU.A), which pays a trailer fee of 0.75% to brokers, and whose management fee is correspondingly higher at 1.45%.

The new launch brings to four the number of Horizons ETFs managed by Guardian Capital. The others include Horizons Active Global Dividend HAZ, which received the 2014 award for the best equity ETF at the Morningstar Awards held in Toronto. As of Dec. 31, Guardian Capital's assets under management totalled more than $23 billion.

The U.S. dividend ETF's co-managers at Guardian Capital are Srikanth Iyer, managing director and head of systematic strategies, and portfolio manager Fiona Wilson.

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About Author

Rudy Luukko

Rudy Luukko  Rudy Luukko is a freelance writer who contributes to Morningstar.ca on topics involving fund industry trends and regulatory issues. He retired in May 2018 from his position as editor, investment and personal finance, at Morningstar Canada, where he had worked since 2004. He has also worked as an editor and writer for various general, specialty and institutional media, and he has co-authored courses for the Canadian Securities Institute. Follow Rudy on Twitter: @RudyLuukko.

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