The Ontario Securities Commission granted an exemption to Hamilton Canadian Financials Yield Maximizer ETF (HMAX) from the concentration restriction in subsection 2.1(1) of National Instrument 81-102 Investment Funds (NI 81-102). This restriction normally prevents a mutual fund from investing more than 10% of its net asset value (NAV) in securities of any one issuer.
HMAX aims to provide monthly income and exposure to a market cap-weighted portfolio of the top ten Canadian financial services companies, which will be rebalanced semi-annually. The ETF’s strategy includes investing proportionally in these companies based on market capitalization, which could result in investments exceeding the 10% concentration limit.
The exemption was granted under the conditions that the ETF’s investments align with its stated objectives and strategies, and that the prospectus discloses the potential for investments over the 10% threshold, the semi-annual rebalancing process, the exemption granted, and the associated concentration risks.
This decision was made under the securities legislation of Ontario and is intended to be relied upon in other Canadian jurisdictions under Multilateral Instrument 11-102 – Passport System. The ETF’s investment strategy and associated risks will be detailed in its prospectus, ensuring transparency for investors.