New ETFs that help investors cut their tax bill

Article Excerpt

This month, we look at three tax-efficient ETFs launched by Horizons earlier this year. The ETFs don’t hold actual stocks or other investments, but rather financial instruments called “total return swaps” that replicate the returns of indexes. Instead of paying dividends or interest that is taxable each year, these ETFs reinvest the value of the payments and reflect them in the net asset value of the funds. You’ll only pay tax on capital gains realized when you sell. The issuers of total return swaps carry credit risk. However, it’s most unlikely that a major Canadian bank or financial company would be unable to meet its obligations. The HORIZONS S&P/TSX CAPPED COMPOSITE INDEX ETF $22.58 (Toronto symbol HXCN) aims to replicate the performance of the broad Canadian equity market. The top stocks in the S&P/TSX Capped Composite Index are Royal Bank, TD Bank, Shopify, Enbridge, CN Rail, Bank of Nova Scotia, Brookfield Asset Management and Barrick Gold. The fund launched in February 2020, and charges an MER of 0.06%. It…

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