Horizons ETF Management rolled out an actively managed exchange traded fund that could help generate higher yields for income-minded investors while limiting downside risk.
On Wednesday, Horizons launched the Horizons Cadence Hedged US Dividend Yield ETF (Cboe: USDY), which has a 0.68% expense ratio.
J. Paul Dokas, Senior Portfolio Manager and Managing Director of Cadence Capital Management, and Robert E. Ginsberg, Senior Portfolio Manager and Managing Director of Cadence Capital management, act as the Sub-Advisor Portfolio Managers. Additionally, Garrett Paolella, Managing Director of Horizons ETFs Management, Troy Cates, Managing Director and Head of Trading and Portfolio Manager of Horizons ETFs Management, and Jonathan Molchan, Director and Head of Product Development and Portfolio Manager of Horizons ETFs Management, will act as the Advisor Portfolio Managers of USDY.
“The launch of USDY further exemplifies our ongoing commitment to offer investors unique approaches to sourcing income and alpha,” Paolella said in a note. “Cadence is an industry leader with approximately $4.6 billion in assets that’s been managing yield-oriented equity strategies for institutional investors since 1988.”
The Horizons Cadence Hedged US Dividend Yield ETF will seek to generate income and long-term growth of capital by focusing on U.S. companies taken from the Russell 1000 or those similar to securities found in the index that have above average dividend yield and demonstrate financial strength, which are high quality companies with strong balance sheets, predictable earnings and cash flow growth, and a history of dividend growth, according to a prospectus sheet. Companies are also screened for financial quality characteristics such as the company’s history in meeting earnings and dividend targets and earnings quality.
Furthermore, USDY’s portfolio managers may buy and sell call and put options on the Russell 1000 Index, the Russell 2000 Index and the S&P 500 Index. The options are used to provide a measure of downside protection and an additional component to the ETF’s risk management. The hedge is achieved through a Collar or sale of an out-of-the-money Index Call option with proceeds going to the purchase of an out-of-the-money Index Put Option.
“We are thrilled to be working with Horizons ETFs Management (US) on the launch of USDY. Their global reach through Mirae Asset Global Investments and dedication to providing investors with a unique approach to sourcing income and alpha makes them an ideal partner,” Michael Skillman, CEO of Cadence Capital Management, said in a note. “Combining our 30-years of investment experience and philosophy with Horizons’ ability to design easy-to-use products that meet diverse investment needs, we believe USDY will be an essential tool for investors seeking income and reduced volatility.”
For more information on new fund products, visit our new ETFs category.