Horizons ETFs Management Canada announced Tuesday the launch of the Horizons China High Dividend Yield Index ETF (HCN), using the Hang Seng High Dividend Yield Index to provide exposure to high dividend yielding Hong Kong-listed equity securities to Canadian investors.
"The initial focus of this index is for Canadian investors to get exposure to Asia," said Steve Hawkins (pictured), Co-CEO of Horizons ETFs. "China is the second largest economy in the world by GDP and it is not going anywhere - with Chinese equities at all-time lows due to the significant selloff during the past year, we think this is a very timely launch from a product perspective."
According to Horizons, China's GDP is projected to nearly double in size to US$22 trillion by 2030. Mirae Asset Global Investments, a subsidiary of Horizons ETFs' parent company Mirae Asset, estimates the nation to grow at a rate of between 6% and 8% for the next few years due to a burgeoning middle class and the adoption of financial liberalization within the nation. "We see a long term shift in China's economy from export to internal consumption," said Hawkins. "The long-term sustainable prospects for the Chinese market on an overall basis are very strong and we think that it is a very opportune time to invest in China."
All the securities that the new fund invests in are listed on the Hong Kong Stock Exchange. "The fund is made up of mainland China companies that are listed on the Hong Kong stock exchange, as well as Hong Kong-listed companies that have a presence in mainland China, but none of the securities we invest in are listed on the mainland China stock exchange," said Hawkins.
The HCN can be licensed for use in structured products and Horizons ETFs is in discussions with several institutional investors on how they could use this exchange traded fund within their products, according to Hawkins. Horizons ETFs used to be active in the structured products space, having issued closed-end funds and principal protected notes. "We are working with Mirae Assets and looking at various different synergies for products, which includes working with a mainland China bank to create a renminbi-based money market fund in Canada," said Hawkins. "We are looking at various Asian-based products to bring to the Canadian retail and institutional market."
Horizons ETFs' Hong Kong affiliate listed an ETF linked to the Hang Seng High Dividend Yield Index in 2013 on the Hong Kong stock exchange. "Through our global partnership with our affiliate companies under Mirae Assets, we are piggybacking on the licensing that Mirae Assets or Horizons ETFs Hong Kong already has for this index, and we have launched the product here in Canada to target that index specifically," said Hawkins. "We are going to use the underlying fund based in Hong Kong as well as direct physical investment into the Hong Kong securities that make up the Hang Seng High Dividend Index." Hawkins added that the USA affiliate of Horizons ETFs has products listed on the New York Stock Exchange (NYSE) and is considering bringing a new ETF to the US market targeting the Hang Seng High Dividend Yield Index as well.
Horizons ETFs is one of the leading ETF issuers in Canada since 2007 and has 70 ETFs listed on the Toronto Stock Exchange (TSX). Horizons manages CAD$5.4 billion in assets of ETFs in Canada, the US, Columbia and Australia. Horizons parent company, Mirae Asset Financial Group, is a Korean based entity with a global presence in asset management, specializing in emerging markets, and has almost 200 listings and about $10 billion in assets worldwide.
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