Horizons launches emerging markets ETF

Toronto-based Horizons ETFs Management (Canada) Inc. has launched a new emerging markets ETF.

Horizons Emerging Markets Equity Index (ticker: HXEM) is designed to replicate the Horizons Emerging Markets Futures Roll Index (Total Return), net of expenses.

The index measures the performance of large- and mid-cap securities across 26 emerging markets. The index reflects returns generated through long notional investments in a series of MSCI Emerging Markets Index Futures that are based on the performance of the MSCI Emerging Markets Index.

“In emerging markets across the world, the effects of rapid economic development and globalization have resulted in a number of companies in developing regions becoming globally significant companies, such as Tencent Holdings, Taiwan Semi-Conductor and Samsung Electronics, to name a few,” said Steve Hawkins, president and CEO of Horizons, in a release.

“In our view, investors that ignore developing markets, ignore key companies that are likely going to play a more significant role in the global economy.”

HXEM is part of Horizons’ Total Return Index ETF series. The ETFs in this series are generally index-tracking ETFs that use an investment structure called a total return swap.

Through this structure, the ETF never buys securities of an index directly. Instead, the ETF receives the total return of its underlying index by entering into a swap agreement with one or more counterparties, usually large financial institutions. By doing so, investors in these ETFs aren’t expected to receive any taxable distributions.

HXEM is currently trading on the Toronto Stock Exchange.

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