Horizons ETFs Management (Canada) Inc. is changing the investment strategy of its Horizons NASDAQ-100 Index ETF (HXQ).
At the close of business on Jan. 3, the ETF will transition from a synthetic total return swap structure to a physical index replication structure, in which the fund will directly hold the constituents of the NASDAQ-100 index in substantially the same proportion.
The fund’s investment objective and management fee will remain the same.
HXQ was one of Horizons’ 15 Total Return Index (TRI) ETFs converted to corporate-class funds in December. TRI funds are designed to deliver the total return of their indexes without the expectation of making taxable distributions.
“The new corporate class structure permits our ETFs within the structure, including HXQ, to improve operational efficiency and substantially reduce the likelihood of distributions,” Steve Hawkins, president and CEO of Horizons ETFs, said in a statement.
The new structure will also allow the ETF to eliminate its swap fee of approximately 37.5 basis points.