Horizons ETFs Management (Canada) Inc. (“Horizons ETFs”) is pleased to announce the launch of the Horizons Canadian Midstream Oil & Gas Index ETF (“HOG”), the first Canadian-listed ETF focused exclusively on Canada’s midstream oil and gas sector. It will begin trading on the TSX today, under the ticker symbol HOG.
HOG seeks to replicate, to the extent possible, the performance of the Solactive Canadian Midstream Oil & Gas Index (the “Midstream Index”), net of expenses. The Midstream Index is designed to provide exposure to equity securities of a group of Canadian oil and gas companies in the midstream sector — companies involved in the transportation and servicing of energy, such as pipelines.
“Most energy investors are familiar with Canada’s larger energy producers and exploration companies, but exposure to the midstream sector presents them with a new opportunity for diversification and yield,” said Howard Atkinson, President of Horizons ETFs. “Midstream companies have historically had lower volatility and generated higher yields than stocks in the upstream (extraction) and downstream (refinement) sectors. In many ways, their return profile is similar to master limited partnerships (MLPs), which are popular income-focused energy sector investments in the U.S.”
The Midstream Index is an equal-weight index, designed and calculated by Solactive, that measures the performance of a selection of Canadian midstream oil and gas companies listed on the Toronto Stock Exchange (TSX).
In 8 years, Solactive has become one of the key players in the indexing space, focusing on tailor-made indices, with 20 billion USD invested in products linked to indices calculated and 125 ETFs tied to its indices, as at December 31, 2013. Headquartered in Frankfurt, Solactive grew significantly on both sides of the Atlantic over the past years, now ranking 3rd in the US, in terms of the number of ETFs linked to indices calculated.
Henning Kahre, Head of the Equity Team, Solactive, said: “We are pleased to be working closely with Horizons once again this year on an innovative and interesting concept. We have seen a significant interest since the beginning of the year in the market for energy related indices due to attractive yields and partial inflation hedge relative to other sectors. The launch of the Solactive Canadian Midstream Oil & Gas Index follows two other launches in that space over the past four months – the Solactive Bond MLP Index and the Solactive US Energy Infrastructure MLP Index.”
“We’re very happy to be partnering with Solactive again on this ETF. The index methodology they have developed really captures an optimal return profile, generating a great balance between the attractive yield and upside growth potential that investors are looking for when they buy Midstream energy stocks,” said Mr. Atkinson.
Currently the Midstream Index holds 12 stocks, very few of which overlap with the securities held in the S&P/TSX Capped Energy Index, the most widely followed benchmark for Canadian energy stocks.
“Considering many of the names in the Index are not held in the broader S&P/TSX Capped Energy Index, HOG can provide energy investors broader diversification for their portfolio,” said Mr. Atkinson.
Historically, midstream stocks have generated attractive yields which can also hold appeal for income seeking investors because fluctuations in oil and gas prices do not affect their bottom line revenues.
“Producers generally have to pay the same price to transport crude or natural gas, regardless of the actual price they receive for the commodity,” said Mr. Atkinson. “It’s for this reason that the midstream sector has always been classified as an income play and continued to generate dividend yields in excess of 4% annually.”
HOG has closed the offering of its initial units and will begin trading on the TSX when the market opens this morning.
About Horizons ETFs Management (Canada) Inc (www.HorizonsETFs.com)
Horizons ETFs Management (Canada) Inc. and its affiliate AlphaPro Management Inc. are innovative financial services companies offering the Horizons ETFs family of exchange traded funds. The Horizons ETFs family includes a broadly diversified range of investment tools with solutions for investors of all experience levels to meet their investment objectives in a variety of market conditions. With approximately $4.1 billion in assets under management and 70 ETFs listed on the Toronto Stock Exchange (as at June 30, 2014), the Horizons ETFs family makes up one of the largest families of ETFs in Canada. Horizons ETFs Management (Canada) Inc. and AlphaPro Management Inc. are members of the Mirae Asset Global Investments Group.
About Solactive AG (www.solactive.com)
Solactive AG is one of the key players in the indexing space. Focusing on
tailor-made indices, the German multi asset class provider is developing,
calculating and distributing them worldwide. As of 31st December 2013, Solactive AG calculates 1,000 indices for over 100 clients in Europe, America and Asia. Approximately 20 billion USD are invested in products linked to indices calculated by the Company globally, primarily via 125 ETFs.
For more information, please visit: Horizons ETFs Management (Canada)