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BetapPro Management Inc. is going "down under" to expand its controversial line of exchange-traded funds (ETFs).

The Toronto-based ETF provider of the Horizons BetaPro bull and bear leveraged ETFs has completed an investment in a private Australian company to offer ETFs on the Australian Securities Exchange.

The foray outside of Canada comes as BetaPro ETFs face roadblocks at some Canadian full-service brokerage firms, which have restricted sales of these investments that can give turbo-charged returns through derivatives. See Fund Watch

The transaction involves BetaPro, a subsidiary of Jovian Capital Corp. acquiring up to a 40-per-cent equity stake in BetaShares Holdings Pty Ltd. for a price of up to $4.5-million Australian dollars "if certain milestones are met," BetaPro said Monday.

BetaPro has also been granted options to acquire additional equity in BetaShares Holdings (parent of BetaShares Capital Ltd. that will be the ETF provider) over time with the exercise price based on a multiple of revenues of BetaShares Holdings.

"The ETF industry in Australia is still young and growing, and we feel that there is a huge potential for BetaShares to become a significant provider of ETF products in that market," said Jovian's chief executive officer Philip Armstrong.

Leveraged ETFs came under scrutiny last year in this country by securities regulators and investor advocacy groups - such as the Canadian Foundation for Advancement of Investor Rights - because of complaints from investors who did not always get the returns they expected.

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