In July 2020, the investment objectives of HOU and HOD changed. The new investment objectives changed the Index used by the ETFs, and allowed adjustment of the leverage ratio employed by the ETFs to provide up to 2.0 times (200%) (HOU) and up to -2.0 times (-200%) (HOD), the daily performance of the exposure to the Index.
As a result of further stabilization of crude oil futures prices and negotiations with the ETFs’ counterparties, the Manager has determined that it will reintroduce the 2.0 and -2.0 times leverage, as applicable, to the exposure of the ETFs. This means, on and after January 20, 2020 and until further public notice is provided by Horizons ETFs, HOU and HOD will provide 2.0 times and -2.0 times, respectively, the exposure to the Index.
In addition, effective the close of business January 20, 2021, the Index roll methodology will change so that the crude oil futures exposure will roll to the next contract over a newly introduced four-day roll process that starts on the day after the front month contract expires. For this month, that means that the underlying crude oil futures exposure for HOU and HOD will roll from the March 2021 contract to the April 2021 contract commencing on January 21, 2021. This change to the Index roll methodology does not affect the leverage ratio that HOU and HOD will employ.
This will be the first time since the investment objective changes in July 2020 that HOU will use 2.0 times, and HOD will use -2.0 times, daily leverage and that the Index exposure will have a multi-day roll period.
The Manager anticipates, under normal market conditions, managing the leverage ratio to be as close to 2.0 times or -2.0 times as practicable for both HOU and HOD, respectively. However, the Manager may, at its sole discretion, change the leverage ratio based on its assessment of the current market conditions for crude oil futures contracts and negotiations with the ETFs’ counterparties at that time.
The roll methodology for the Index (which includes roll dates, the primary and secondary futures contracts, and the allocation between the primary and secondary futures contract) may also be changed at any time by the Manager in its sole discretion based on, among other things, negotiations with the ETFs’ counterparties, liquidity for the underlying primary and secondary futures contracts as the primary futures contract’s expiry approaches.
The roll methodology for the Horizons Crude Oil Rolling Futures Index is posted on the Horizons ETFs website at www.HorizonsETFs.com.
About Horizons ETFs Management (Canada) Inc. (www.HorizonsETFs.com)
Horizons ETFs Management (Canada) Inc. is an innovative financial services company and offers one of the largest suites of exchange traded funds in Canada. The Horizons ETFs product family includes a broadly diversified range of solutions for investors of all experience levels to meet their investment objectives in a variety of market conditions. Horizons ETFs has over $17 billion of assets under management and 93 ETFs listed on major Canadian stock exchanges.
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Contact Horizons ETFs at 1-866-641-5739 (toll-free) or (416) 933-5745
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Contact Jonathan McGuire
Corporate Communications Manager
Horizons ETFs Management (Canada) Inc.
(416) 640-2956
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Commissions, management fees and expenses all may be associated with an investment in exchange traded products (the “Horizons Exchange Traded Products”) managed by Horizons ETFs Management (Canada) Inc. The Horizons Exchange Traded Products are not guaranteed, their values change frequently and past performance may not be repeated. The prospectus contains important detailed information about the Horizons Exchange Traded Products. Please read the relevant prospectus before investing.
Certain Horizons Exchange Traded Products like HOU and HOD may have exposure to leveraged investment techniques that magnify gains and losses and which may result in greater volatility in value and could be subject to aggressive investment risk and price volatility risk. Such risks are described in the prospectus.
Certain statements herein may constitute a forward-looking statement, including those identified by the expression “expect” and similar expressions (including grammatical variations thereof). The forward-looking statements are not historical facts but reflect the author’s current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking statements. These forward-looking statements are made as of the date hereof and the authors do not undertake to update any forward-looking statement that is contained herein, whether as a result of new information, future events or otherwise, unless required by applicable law.
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