TORONTO (September 25, 2020) – CI Investments Inc. (“CI”) today announced a proposal to implement fixed administration fees for each series of 19 CI exchange-traded funds (“ETFs”), replacing the current variable operating expenses being charged to the ETFs (the “Proposal”).
If approved by securityholders, CI, as manager, will be responsible for the operating expenses of each ETF, other than certain expenses (“Certain Expenses”), in exchange for the payment by the ETF of a fixed administration fee. Under the Proposal, the management expense ratio (“MER”) of each ETF series will consist of the management fee, the fixed administration fee, Certain Expenses and applicable taxes.
Fixed administration fees have become a more common investment industry practice in recent years and offer several benefits to investors, including greater predictability and transparency of the MER for each ETF, as well as protection from potential increases in future operating expenses.
The following is a list of the ETFs included in the Proposal and their ticker symbols:
|Fund name||Ticker(s)||Fund name||Ticker(s)|
|CI First Asset Active Canadian Dividend ETF||FDV||CI First Asset Global Financial Sector ETF||FSF|
|CI First Asset Active Credit ETF||FAO, FAO.U||CI First Asset Investment Grade Bond ETF||FIG, FIG.U|
|CI First Asset Active Utility & Infrastructure ETF||FAI||CI First Asset Long Duration Fixed Income ETF||FLB|
|CI First Asset Canadian Buyback Index ETF||FBE||CI First Asset MSCI Canada Quality Index Class ETF||FQC|
|CI First Asset Canadian REIT ETF||RIT||CI First Asset Preferred Share ETF||FPR|
|CI First Asset CanBanc Income Class ETF||CIC||CI First Asset Short Term Government Bond Index Class ETF||FGB|
|CI First Asset Core Canadian Equity Income Class ETF||CSY||CI First Asset U.S. & Canada Lifeco Income ETF||FLI|
|CI First Asset Enhanced Government Bond ETF||FGO, FGO.U||CI First Asset U.S. Buyback Index ETF||FBU|
|CI First Asset Enhanced Short Duration Bond ETF||FSB, FSB.U||CI First Asset U.S. TrendLeaders Index ETF||SID|
|CI First Asset European Bank ETF||FHB|| || |
Pursuant to National Instrument 81-102 Investment Funds, the Proposal requires the approval of securityholders of the ETFs. Accordingly, meetings of securityholders will be held on Thursday, December 3, 2020, and if required, adjourned meeting(s) will be held on Thursday, December 10, 2020. Holders of record for each series of securities on October 23, 2020 will be entitled to receive notice and vote at the meetings. The Notice and Access Document which details the Proposal will be mailed to investors and the Management Information Circular will be available on www.sedar.com and on www.firstasset.com on or about October 29, 2020. If approved, the change to fixed administration fees will take effect on or before January 1, 2021.
The Independent Review Committee of the ETFs has reviewed the Proposal with respect to potential conflict of interest matters and provided its positive recommendation, having determined that the Proposal achieves a fair and reasonable result for each of the ETFs.
Risk rating changes
CI has also reviewed the risk ratings for each ETF included in the Proposal and will be making changes to the risk rating for six ETFs, effective immediately:
|Fund name||Current risk rating||New risk rating|
|CI First Asset Active Credit ETF||Low||Low-to-Medium|
|CI First Asset Canadian Buyback Index ETF||Low-to-Medium||Medium|
|CI First Asset Canadian REIT ETF||Low-to-Medium||Medium|
|CI First Asset Core Canadian Equity Income Class ETF||Low-to-Medium||Medium|
|CI First Asset MSCI Canada Quality Index Class ETF||Low-to-Medium||Medium|
|CI First Asset U.S. Buyback Index ETF||Medium||Medium-to-High|
The changes are based on the risk classification methodology mandated by the Canadian Securities Administrators to determine the risk level of mutual funds. CI reviews the risk rating for each of the funds it manages at least on an annual basis, as well as when a fund undergoes a material change. These changes are not the result of any changes to the investment objectives, strategies or management of the ETFs.
Information about CI’s ETFs is available at www.firstasset.com.