Description

HFR is a high-grade corporate bond ETF designed to pay a higher yield as interest rates rise thereby reducing the potential impact of interest rate fluctuation on the market value of the ETF. HFR will hedge the portfolio’s interest rate risk to generally maintain a portfolio duration of less than one year. Investors can use HFR in combination with existing bond holdings to help lower the overall interest rate sensitivity of their portfolios. Through interest rate swap agreements, HFR effectively hedges against rising interest rates by exchanging a fixed rate for a floating rate, potentially offering investors downside price protection while still benefiting from higher yields. HFR seeks to generate income that is consistent with prevailing Canadian short term corporate bond yields while reducing the potential effects of Canadian interest rate fluctuations on HFR. HFR invests primarily in a portfolio of Canadian debt (including debt-like securities) directly, and hedges the portfolio’s interest rate risk by maintaining a portfolio duration that is not more than one year. HFR may also invest directly in debt of U.S. companies, as well as indirectly through investments in securities of Listed Funds. HFR uses derivatives, including interest rate swaps, to deliver a floating rate of income.