Horizons ETFs launches leveraged and inverse REIT ETFs for Canadian market
German-headquartered index provider Solactive writes that as the Canadian economy emerges from the pandemic, real estate investments are back on the radar for investors.
Some have been discussing the possibility of a housing bubble, while others believe the markets are still on the rise with the broader economic reopening, including workers returning to offices and shoppers returning to malls.
Major Canadian ETF provider Horizons ETFs has launched a pair of leveraged and inverse leveraged ETFs: the BetaPro Equal Weight Canadian REIT 2x Daily Bull ETF (HREU:TSX), and the BetaPro Equal Weight Canadian REIT -2x Daily Bear ETF (HRED:TSX). The ETFs provide leveraged and inverse leveraged, respectively, to the Canadian REIT sector. The two ETFs trade on the Toronto Stock Exchange.
Leveraged and inverse leveraged ETFs are designed to allow advanced investors to take high-conviction positions on the movement of an underlying benchmark. Both ETFs, HREU and HRED, use the Solactive Equal Weight Canada REIT Index as their underlying index, with HREU and HRED corresponding to two times (200 per cent) long and inverse the daily performance of the underlying index, respectively.
The Solactive Equal Weight Canada REIT Index tracks the performance of the securities that are classified as Real Estate Investment Trusts (REITs) on the Toronto Stock Exchange. The index is not focused on a specific type of REIT, such as office or residential; rather it provides broad exposure to the Canadian REIT universe. For example, potential index constituents can include owners, operators and managers of residential apartment complexes, office, retail, and industrial real estate space. There are minimum market capitalization and minimum average daily value traded requirements on new and current index components. The index is published in Canadian Dollars (CAD) and is reviewed semi-annually in March and September.
“The pandemic has greatly accelerated change in the real estate market. What seemed ‘impossible’ just years ago has become the new normal – for example effective work from home practices and virtual restaurants with no brick-and-mortar location. As the urbanisation trend enters its new phase, we are bound to encounter many more disruptions and potential opportunities in the real estate market,” says Timo Pfeiffer, Chief Markets Officer at Solactive. “As we rank first amongst index providers in year over year growth, we thank our Canadian clients like Horizons ETFs, which continues to issue multiple structurally innovative products using Solactive’s quality indices.”
Steve Hawkins, Chief Executive Officer at Horizons ETF, says: “In addition to being one of the biggest contributors to Canada’s GDP, the real estate sector is often viewed as a bellwether of the overall health of the Canadian economy. Whether you are bullish or bearish on a sector, using our suite of leveraged and inverse leveraged ETFs can be an easier way to make a high-conviction, short-term trade, versus traditional leverage strategies that use margin, borrowing, or potentially take on unlimited risk. These two new ETFs give investors the ability to invest those views on either the long or short-side of the Canadian REIT sector without taking on the high costs of using margin, borrowing or shorting directly.”