In a volatile economic environment, investors might want to protect and diversify their portfolio. Utility services companies are likely to suffer less from fluctuations, as demand for their products continues stable even during recessions, therefore providing stability to an investment strategy. Additionally, companies that pay consistent dividends are also likely to add more stability to a portfolio, as they offer investors an income source, which might be beneficial, especially during turbulent periods in the market. To provide stockholders with defensive exposure opportunities, Horizons ETFs now expands its engagement with Solactive and launches the Horizons Canadian Utility Services High Dividend Index ETF (ticker UTIL). The fund aims to track the Solactive Canadian Utility Services High Dividend Index and was listed on the Toronto Stock Exchange (TSX) on 10 August 2022.

From an overall perspective, the index is designed to measure the performance of securities from the utilities, telecommunications, and pipeline industries that distribute high dividend payments. To be eligible to constitute the Solactive Canadian Utility Services High Dividend Index, companies must be listed on the Toronto Stock Exchange and classified under any of the following industries according to FactSet classification: electric utilities, gas distributors, water utilities, alternative power generation, and oil & gas pipelines, major telecommunications, and wireless telecommunications.

Timo Pfeiffer, Chief Markets Officer at Solactive, commented: “We are pleased to launch such a product with Horizons and strengthen our relationship with them. The strategy aims to offer a defensive approach to investors seeking to hedge their portfolio against economic volatility. It could become useful in the following months, as the macroeconomic outlook is deteriorating, and the rate of inflation is rising.”

Steve Hawkins, President and CEO of Horizons ETFs, says: “With rising inflation, investors are increasingly looking towards dividend and yield-focused strategies to outpace costs and stay ahead in their portfolios. However, with the spectre of a potential recession on the horizon, investors are also looking for these income-producing mandates to provide some protection from a broader market decline. Traditionally, utility services have been regarded as a relatively defensive sector of the stock market, as their services – including electricity, oil, and internet – are always necessary.”