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Leveraged loan ETFs in Canada boost defences in case of selloff

Canadian exchange-traded funds that buy leveraged-loans are shoring up defences against a sudden flight by investors.

Canadian exchange-traded funds that buy leveraged-loans are shoring up defences against an abrupt flight by investors.

The Horizons Senior Loan ETF received approval from the Ontario Securities Commission to enhance borrowing limits to help meet potential redemptions in an asset class where it will take as long as 20 days to shut a trade. First Trust Advisors, which manages the largest loan ETF in Canada, is seeking similar permission from authorities, according to Bill Housey, who manages that fund.

\”We put this in place due to the potential timing issues around settlement of senior loans,\” Steven Hawkins, co-chief executive officer of the Horizon ETF, said inside a telephone interview. \”The manual process of signatures, couriers and faxing is simply mind-boggling. It\’s an unfortunate fact of the current market.\”

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