Yes, the swap fee allows the company to enter into contracts with banks in order to swap dividends for capital gains. On its website HXS shows an MER of 0.11%, but we would assume it is 0.40% due to the swap fee which is unclear whether it is included in the MER on the Horizons site. Regardless, five-year annualized return net of all fees is 14.19%. We are very comfortable with the product, and for investors looking to shift tax burden to capital gains and/or avoid withholding taxes it makes sense. Note the 5-year return on VFV is 14.25%, so essentially identical. But for some investors the HXS tax benefits can be substantial.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in VFV.