Silence your swan song - MoneySense

Silence your swan song

Are funds that protect against crashes worth the cost?




Horizons ETFs launched the world’s first “Black Swan” exchange-traded funds (HUT and HUS.U) a few months ago to protect investors in Canadian and U.S. stocks from a severe crash or correction. They follow a standard index-tracking strategy and use stock options as built-in portfolio insurance in case a rare Black Swan event sinks the markets. But with fees of 0.95%—at least triple the price of a standard ETF—plus the cost of the options, are these funds worth it?

Probably not if you’re still building your wealth. If you’re fairly young and your portfolio is small, you may be able to recoup losses relatively easily. But once you’ve built up your savings, or are close to withdrawing them, the peace of mind might be worth the extra cost.

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