Horizon’s Drops HOU, HOD ETF’s To 1x Leverage

Horizon’s ETF’s this morning announced significant temporary changes to its BetaPro Crude Oil 2x Daily Bull ETF (TSX: HOU) and BetaPro Crude Oil -2x Daily Bear ETF (TSX: HOD) exchange traded funds, most significant of which is the temporary reduction to a 1x leverage on the products.

The temporary changes have been put in place largely as a result of the current volatility being experienced in the oil markets. Given that the funds are meant to represent a 2x leverage of whatever move oil makes in the day, if the price of oil were to move more than 50% in a single day, one of the two ETF’s should in theory see its net asset value drop to $0.00 as a result of the nature of the investment strategy.

In addition to dropping to 1x leverage, the fund is also changing its investing methodology. While normally it would invest in the front month oil contract until the 6th of the month, both ETF’s will now see their assets roll to the July contract effective at 2:30 today with 100% exposure. This is being done as a result of the current volatility in the June contract.

Lastly, as of April 21 the ETF’s will no longer be taking additional subscriptions until further notice. What this means in effect is that the ETF’s will trade more like a closed-end mutual fund rather than that of an ETF, as the equity may no longer trade in line with its net asset value.

The manager of the fund is expected to announce future roll dates as they happen, until such time that the ETF’s return to their intended normal operation.

A full explanation of how the fund is intended to work can be found here.


The author has no securities or affiliations related to any organization mentioned. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

25 thoughts on “Horizon’s Drops HOU, HOD ETF’s To 1x Leverage

  • April 22, 2020 11:28 AM at 11:28 am
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    so what happens to people who are holding hou and are unable to sell at the current price?

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    • April 22, 2020 2:32 PM at 2:32 pm
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      Losing bad, lose all money because of the rich coronapumping and coronadumping. Sorry anna.

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      • April 22, 2020 7:41 PM at 7:41 pm
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        Not necessarily bro. Hou has a lot of potential. You guys watch tomorrow it will go up again to at least 2$/ share

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    • April 23, 2020 2:10 PM at 2:10 pm
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      What is happening to HOU ? The oil is up but HOU is down over 30%.
      Should i hold on this or sell ?

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    • June 2, 2020 10:22 PM at 10:22 pm
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      Lost all my investment in retirement, Tfsa and margin total worth half a million. Hopefully these guys will be held accountable.

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  • April 22, 2020 2:26 PM at 2:26 pm
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    screwed big time anna

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  • April 23, 2020 2:18 PM at 2:18 pm
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    This is ridiculous, and the last time I will trade Horion ETFs. How can you trust a company that changes the rules at the most important moment. I gonna to see what kind of legal action is possible.

    In the meantime, I will do my part to make this action well reported and advise anyone I know to stay away for Horizons.

    The bull ETF is supposed to go up with oil right!! Total corruption! No decay… down 22% with oil prices going up. What a joke this company is!

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    • April 23, 2020 3:09 PM at 3:09 pm
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      Hi Nathan, I feel the exact same as you. How can they to that at the worst time and we can do nothing about it ? I’ll will look my side to see if we can have a legal action or start a class action. We are supposed to be up + 90% in the last 2 days and now we are down by 50% this is totally ridiculous. Please let me know if you find something and I will do same.

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    • April 24, 2020 4:26 PM at 4:26 pm
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      It’s still going awry today. A class action is warranted. I’m done too with these shysters.

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      • April 25, 2020 8:08 PM at 8:08 pm
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        Sorry guys. I went the other way HOD and instead of losing everything which I should have….I only lost about 30% beacuse of there changes. I do plan on holding on as I see oil prices coming down this coming week and getting my money back and then getting the hell out. Good luck trying to get any of your money back…..which would have been mine.

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  • April 23, 2020 3:02 PM at 3:02 pm
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    Stay away from all the Horison ETFs, such as HOU, HQU, HOD, … this is the most corrupted company I know. They are not vivid and hiding the most important facts of their ETFs from the investors. They should be sewed and their company (what a joke, company) should be blocked.

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  • April 23, 2020 3:08 PM at 3:08 pm
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    what would be the best move right now? buying more of the stock, keeping it or selling? I think selling it will not make much sense because even with the consolidation of the stock we will have the same price value just a lesser amount of stock.

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    • April 23, 2020 5:09 PM at 5:09 pm
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      No offence Dave, but you would be a fool to throw good money after bad. This company is corrupt and can not be trusted. Find a trustworthy company…

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  • May 6, 2020 4:08 PM at 4:08 pm
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    You can call the OSC to file a complaint (1-877-785-1555). Looks like there was a class action lawsuit filed against Horizons for one of its inverse ETFs last year and it was ultimately dismissed (https://www.advisor.ca/news/industry-news/ontario-court-dismisses-proposed-class-action-against-horizons/). However, it may be possible to argue that the change in leverage for HOU constitutes secondary market misrepresentation,which could open the door to a class action lawsuit.

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    • May 12, 2020 5:06 PM at 5:06 pm
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      If you find lawsuit info I would like to join. HOU cost me thousands and if was correct would actually be up right now.

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    • June 4, 2020 5:59 PM at 5:59 pm
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      I saw an article this case is getting revived. A CAL needs to be filed for HOU. How can these managers issue 2 reverse splits within 4 weeks. Now look where crude is trading at.

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  • May 12, 2020 9:04 PM at 9:04 pm
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    Same for me. I think we’d need a large investor to get the ball rolling… Or at least the right lawyer.

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    • May 15, 2020 7:53 AM at 7:53 am
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      We need to keep looking into this Its Not right they had no backstop or plan in place for their product, when the one time in history, oil goes negative, they where aware this could happen yet they did nothing right before it happen! they design the product.. its there responsibility! no alert announcement just before this happen. nothing!!! just let everyone lose their asses.
      Keep pushing this people….

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  • May 15, 2020 7:58 AM at 7:58 am
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    also to make matters worse. They take away the leverage, In doing this they make it impossible for Investors to recoup their loss as the oil price moves up!! WTF!!!!!!! Its not what I paid for when I bought their ETF product!
    Horizons f-d up big time they need to be accountable!

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  • May 26, 2020 11:09 PM at 11:09 pm
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    I think its an absolute scam that they just pulled off. We buy the stock because it is volatile and are prepared to take that risk. No one told us they were going to cancel 99.5% of our shares through a redemption at a next to nothing price. We have zero chance of recovering any of our money when they consolidated (Cancelled) the shares. They did not adhere to the indexing of 2X oil futures that we bought the stock based on. Had they done so, I would have recovered almost 60% of my investment to date. A class action suit against the Company and the Directors for there mismanagement and negligence of this fund is certainly warranted to protect the public from this happening.The Ontario Securities Commission should be contacted by each and every shareholder and file a complaint.

    Reply

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