The Securities Commission granted an exemption to a mutual fund manager (the Filer) from certain requirements of National Instrument 81-102 Investment Funds (NI 81-102) regarding the use of performance ratings and awards in sales communications. The exemption allows the Filer’s existing and future mutual funds to reference FundGrade A+ Awards, FundGrade Ratings, Lipper Awards, and Lipper Leader Ratings in their sales communications.
Under NI 81-102, sales communications must not refer to a mutual fund’s performance rating or ranking unless it matches the standard performance data periods required (except since inception) and is current to a specified calendar month end. The Filer sought relief from these requirements because the FundGrade and Lipper ratings and awards do not align with these timeframes.
The Commission determined that the exemption was not detrimental to investor protection and granted it subject to conditions. These conditions include that the sales communications must comply with other parts of NI 81-102 and contain specific disclosures, such as the name of the award or rating, the number of funds in the category, the ranking entity, the period the rating or award is based on, and a statement that ratings are subject to change monthly. Additionally, the FundGrade A+ Award and Lipper Awards referenced must not have been awarded more than 365 days before the date of the sales communication, and the ratings and awards must be based on performance comparisons within categories established by the Canadian Investment Funds Standards Committee (CIFSC) or its successor.
The decision was made by the Autorité des marchés financiers as the principal regulator, with the Ontario Securities Commission evidencing the decision. The exemption is documented under application file #2022/0061 and SEDAR #3332364.