NEW YORK, Nov. 18, 2013 (GLOBE NEWSWIRE) -- Horizons ETFs Management (USA) LLC ("Horizons USA"), a member of the Horizons ETFs Group, one of the largest collective families of exchange traded funds (ETFs) in the world, announced today that it has launched the Horizons S&P Financial Select Sector Covered Call ETF ("HFIN"), an ETF that uses an innovative covered call strategy designed to potentially generate additional income from the option-eligible stocks in the S&P Financial Select Sector Index (the "Reference Stock Index"). The new ETF begins trading today on the New York Stock Exchange under the symbol HFIN (NYSE:HFIN).
HFIN generally seeks to provide exposure to the performance of the S&P 500 Financial Select Sector Stock Covered Call Index (the "Underlying Index") and will make monthly distributions of dividend and net call option income, if any. Horizons USA has an exclusive agreement with S&P Dow Jones Indices LLC ("S&P") to offer an ETF in the U.S. based on the Underlying Index.
"U.S. stocks have been a great place to be invested over the last two years," said Howard Atkinson, Managing Director of Horizons USA. "Some Investors may feel that now is a good time to be looking at more defensive strategies to preserve some of their returns. A covered call strategy can keep you invested in equities and potentially lower the volatility of returns of those equities while attempting to generate additional income, which can mitigate losses, during certain market conditions."
HFIN uses an index replication strategy, investing substantially all of its total assets in the same securities of the Underlying Index. HFIN will generally own all the securities of the Reference Stock Index, in substantially similar weights to the index, and will sell or "write" covered call options on up to 100% of each of the individual option-eligible securities in the portfolio. A covered call is an options strategy whereby an investor holds a long position in an asset and sells or "writes" call options on that same asset in an attempt to generate more income (the additional income from option premium) than the asset would otherwise provide on its own from dividends or other distributions.
The Underlying Index uses an "out-of-the-money" covered call strategy which systematically determines the strike prices and call coverage of each position based on the prevailing price and implied volatility of the stock at the time the calls are written. An "out-of-the-money" call option is one with a strike price higher than the current market price of the underlying security.
Historically, during bear markets, range-bound markets and modest bull markets, this type of covered call strategy has generally outperformed its underlying securities. During strong bull markets, when the underlying securities may frequently rise through their strike prices, covered call strategies historically have tended to lag.
"HFIN is the second ETF we've launched in the U.S. market that replicates one of S&P's covered call indices. HFIN uses the same methodology as the Horizons S&P 500® Covered Call ETF, which trades on the NYSE under the ticker HSPX," said Mr. Atkinson.
"While the strong bull market in U.S. stocks has made it difficult for this type of covered call strategy to outperform a reference stock index," Mr. Atkinson added, "we've been impressed with the ability of HSPX to deliver most of the market returns of the S&P 500. HFIN will seek to have a similar return profile and deliver most of the upside of the S&P Financial Select Sector Index and potentially outperform the index when it generates option premium income."
Horizons USA serves as sub-adviser to HFIN and HSPX. Exchange Traded Concepts, LLC has listed HFIN and HSPX on the NYSEArca and also serves as its adviser. Foreside Fund Services, LLC facilitates distribution of HFIN and HSPX. Citibank, NA and Citi Fund Services Ohio, Inc. serve as custodian and administrator, respectively.
Individual shares of the Horizons-branded exchange traded funds (the "Funds") may be purchased or sold in the secondary market throughout the regular trading day on the New York Stock Exchange through a brokerage account. However, shares are not individually redeemable directly from the Funds. Each Fund issues and redeems shares on a continuous basis, at NAV, only in blocks of shares ("Creation Units"), principally in-kind for securities included in the relevant Index. The Creation Unit for HSPX is 50,000 shares and the Creation Unit for HFIN is 25,000 shares.
Before investing you should carefully consider the Funds' investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained by visiting the Fund's website at www.HorizonsETFs.com/USA. Please read the prospectus carefully before you invest. Distributor: Foreside Fund Services, LLC.
There are risks involved with investing, including possible loss of principal. The Funds are nondiversified and may invest a greater portion of their assets in securities of a small number of issuers which may have an adverse effect on Fund performance. Concentration in a particular industry or sector will subject the Funds to loss due to adverse occurrences that may affect that industry or sector. The Funds risk not benefiting from potential increases in the value of underlying securities above the exercise prices of the written covered call options, and are subject to the risk of declines in the value of such securities.
Each sector fund is subject to its own specific risk factors. See prospectus for specific risks regarding each Fund and sector.
It is not possible to invest directly in an index. The Underlying Index is a product of S&P Dow Jones Indices LLC. S&P®, S&P 500®, and S&P 500 Financial Select Sector Covered Call™ are trademarks of S&P or its affiliates. The Underlying Index and the trademarks have been licensed for use in connection with HFIN by Horizons USA or its affiliates. HFIN is not sponsored, endorsed, sold, or promoted by S&P or its affiliates and neither S&P nor its affiliates makes any representation regarding the advisability of investing in HFIN.
An option is a contract sold by one party to another that gives the buyer the right, but not the obligation, to buy (call) or sell (put) a stock at an agreed upon price within a certain period or on a specific date.
About the Horizons ETFs Group (www.HorizonsETFs.com)
Horizons ETFs Management (USA) LLC is a member of the Horizons ETFs Group. The Horizons ETFs Group consists of innovative financial services companies offering regional families of ETFs in Canada, Korea, Hong Kong, Australia, the United States and Colombia. Currently, all of the ETFs offered by these companies use the Horizons ETFs' brand with the exception of the 'BetaShares' family of ETFs in Australia and the 'Mirae Asset Tiger ETFs' family in Korea. With approximately US$8.15 billion in assets under management and 142 ETF listings worldwide (as of Sept. 30, 2013), the Horizons ETFs Group makes up one of the largest collective families of ETFs in the world. All of the Horizons ETFs Group companies and affiliates are subsidiaries of Mirae Asset Global Investments Co., Ltd.
About Mirae Asset Global Investments (www.MiraeAsset.com)
Mirae Asset Global Investments is one of the world's largest investment managers in emerging market equities (Investments & Pensions Europe, January 2013). With approximately 550 employees, including 126 dedicated investment professionals, Mirae Asset offers a breadth of emerging markets expertise. Mirae Asset's offices are located in Australia, Brazil, Canada, China, Colombia, Hong Kong, India, Korea, Taiwan, the U.K., the United States and Vietnam. Headquartered in Seoul, South Korea, the firm manages $59 billion in assets globally through a diversified platform to offer market-leading franchises in traditional equity and fixed income products, ETFs and alternative strategies, such as real estate, private equity and hedge funds.