Topic: How To Invest

Q: Hi, Pat. I am wondering about investing in the Horizons Seasonal Rotation ETF. What are your thoughts on this ETF? Thanks.

Article Excerpt

A: The Horizons Seasonal Rotation ETF, $19.10, symbol HAC on Toronto (Units outstanding: 11.5 million; Market cap: $219.7 million; www.horizonsetfs.com), is an example of an ETF that shows a wide disparity between its holdings and the investments the sales literature describes. For example, this ETF aims to tactically spread and move around its holdings between stocks, fixed-income investments, commodities and currencies based on historical seasonal trends. The managers believe that investment markets follow these seasonal trends and so have seasonal rhythms. Some of these patterns occur over the course of weeks or months; others last only a few days. According to its sales literature, by rotating a portfolio in reaction to these seasonal patterns, a “well-informed investor can realize returns that are superior to a static investment in broader markets and sector markets.” However, apart from holding 43.9% of its assets in cash, the Horizons Seasonal Rotation ETF currently has 29.5% of its assets in Horizons bond ETFs. Regardless of the proportion that…

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