The Ontario Securities Commission granted an exemption to two exchange-traded alternative mutual funds from the concentration restriction in section 2.1(1.1) of National Instrument 81-102 Investment Funds (NI 81-102). This exemption allows the funds to pursue their investment objectives of obtaining leveraged exposure to the Solactive Equal Weight Canada Banks Index, which comprises the six largest Canadian banks by market capitalization. The exemption is subject to conditions, including adherence to the funds’ stated investment objectives, daily leverage reset, and rebalancing strategy, as well as specific disclosure requirements in the funds’ prospectus regarding the exemption and associated concentration risks. The decision is based on the rationale that the funds’ investment strategy is transparent, passive, and fully disclosed, and that the constituent banks are highly liquid securities on the Toronto Stock Exchange. The exemption is conditional upon the funds maintaining compliance with their investment objectives and strategies, and providing appropriate disclosures in their prospectus.
