The Ontario Securities Commission granted an exemption to TD Asset Management Inc. (TDAM) and its affiliates, allowing their managed mutual funds (Top Funds) to invest in certain related underlying investment funds (Existing and Future Underlying Pooled Funds) that are not subject to National Instrument 81-102 (NI 81-102) and are not reporting issuers. This decision is based on the condition that these investments are compatible with the Top Funds’ objectives and strategies, and comply with the illiquid asset restrictions of NI 81-102.
The Existing Underlying Pooled Funds, namely TD Emerald Private Debt Pooled Fund Trust and TD Greystone Mortgage Fund, primarily invest in private debt securities and Canadian commercial real estate mortgages, respectively, which are generally illiquid. The Future Underlying Pooled Funds will be similar in nature. These funds are not reporting issuers and their units are sold under prospectus exemptions.
The exemption is subject to several conditions, including that the Top Funds are treated as arm’s-length investors, the investments are made at terms as favorable as for other third-party investors, and that at least 20% or 50% of the units of the Underlying Pooled Funds are held by unitholders not affiliated with the Filer, depending on the valuation method of the fund. Additionally, the investments must be disclosed to investors, no duplicate fees will be charged, and the Independent Review Committee (IRC) must review and approve the investments.
The decision is made under sections 2.5(2)(a) and (c) of NI 81-102 and section 19.1, with the understanding that the Top Funds may rely on section 2.5(7) of NI 81-102 regarding investment fund conflict of interest restrictions. The exemption aims to provide Top Funds with cost-effective exposure to private investments through a diversified portfolio.