Fund aims to provide more concentrated exposure to EM leaders in key sectors than most index-based strategies
Horizons ETFs has announced a new actively managed option for Canadian investors seeking exposure to emerging markets.
The Horizons Emerging Markets Leaders ETF, trading under the ticker symbol HEMC on the TSX, is sub-advised by Mirae Asset Global Investments’ global EM equity team. The sub-advisor team from Mirae Asset consists of 13 portfolio managers and analysts, with many located in the local markets HEMC invests in.
“We are excited to once again be partnering with one of our global affiliates to bring to Canadians their leading expertise in emerging markets, an asset class we believe offers very compelling long-term growth and return potential,” said Horizons ETFs President and CEO Steve Hawkins.
With a management fee of 0.75%, HEMC seeks to achieve capital growth over the long term by investing in equity securities of issuers that are located in emerging markets, or have economic ties to emerging markets.
The ETF focuses heavily on stocks that Mirae Asset expects to benefit from the rising trends of consumption and growing individual purchasing power in developing markets, resulting in a portfolio that’s more concentrated than most strategies that lean on emerging market indices.
“Most emerging market exposure in the Canadian ETF market is through broad index strategies,” Hawkins said. “[W]hile there are some cost and liquidity benefits to indexing, emerging markets is an area where we believe an active portfolio management team … can add real value to long-term performance.”
Traditionally, emerging market economies have been heavily tilted toward commodity and industrial sectors, but that has changed in the last decade. Over that time, many leaders among developing nations – most notably, China and India – have transitioned into more consumer-focused economies with large technology and service sectors.
“Historically, Canadian investors have shied away from emerging markets exposure due to already having extensive exposure to materials and energy in the domestic Canadian equity market,” Hawkins said. “[I]nvestors may lose out on a lot more return potential in the emerging markets from key growth opportunities in technology and consumer-focused industries that would not be easily accessible through developed market investing.”
“We are excited to present our investment capacity in Emerging Market to Canadian investors,” said Mirae Asset USA CEO Joon Hyuk Heo. “Mirae Asset’s proven research-driven investment process bolstered by input from interactions with local investment teams across 15 offices around the world can deliver long-term investment opportunities to our investors.”
