AlphaPro offers balanced ETF

By Vikram Barhat | July 28, 2010 | Last updated on July 28, 2010
2 min read

Close on the heels of Global Dividend ETF and Canada’s first actively managed corporate bond ETF, Horizons AlphaPro launches Canada’s first actively managed Balanced ETF.

The Balanced ETF, which begins trading today on the Toronto Stock Exchange, seeks to provide a consistent rate of return balanced between current income and long-term capital growth.

“Balanced mutual funds are easily one of the best selling mutual fund categories, because it’s a simple default investment solution for retail investors,” says Ken McCord, president of AlphaPro. “Investors who have embraced ETF investing have had few options in selecting a balanced mandate.”

He says the Balanced ETF is another step in the evolution of ETF investing. “We’re offering not only, in our view, one of the best actively-managed balanced mandates out there, but we’re also offering it at one of the lowest management fees in the industry.”

The ETF invests primarily in a balanced portfolio of publicly traded equity, income trust and debt securities located predominantly in Canada. It may invest in exchange traded funds and exchange traded notes with an investment objective of obtaining direct or indirect exposure to these securities.

Additionally, the ETF allows retail investors access to institutional money manager Hillsdale Investment Management Inc., which will sub-advise the ETF.

“We are really excited to get Hillsdale as the manager of this mandate, which is custom-built for this ETF,” says McCord. “Their management process is only further enhanced by the low-cost, convenience and flexibility of the ETF structure.”

Initially, between 60% and 80% of the portfolio of the Balanced ETF will be invested in equity and equity-related securities, while 20% to 40% will be invested in corporate bonds, government debt and fixed income securities.

At least 70% of the portfolio will be invested in Canadian securities or Canadian dollar denominated debt. It also seeks to hedge foreign currency exposure to the Canadian dollar at all times. Hillsdale may, from time to time, use derivatives instruments for hedging and non-hedging purposes.

Instead of running a traditional static 60/40 asset allocation, Hillsdale will be using both asset allocation and its security selection screening in an attempt to deliver superior risk-adjusted returns versus their category peers.


Vikram Barhat