The Securities Commission has granted an exemption to investment funds managed by Mackenzie Financial Corporation, allowing them to invest beyond the usual 10% net asset concentration limit in debt securities issued or guaranteed by foreign governments or supranational agencies. This exemption is subject to certain conditions and is based on National Instrument 81-102 Investment Funds (NI 81-102), specifically subsection 2.1(1), which restricts investment concentration, and section 19.1, which allows for exemptions.
The decision permits funds to allocate up to 20% of net assets in AA-rated foreign government debt and up to 35% in AAA-rated foreign government debt. The exemption aims to enable funds to better achieve their investment objectives and benefit investors by allowing more flexibility in holding high-quality foreign government securities.
The granted relief is contingent on several conditions: the funds must have investment objectives that accommodate a majority investment in fixed income securities, including foreign government securities; the relief for AA and AAA-rated securities cannot be combined for a single issuer; the securities must be traded on mature and liquid markets; the acquisition must align with the fund’s fundamental investment objectives; and the funds’ prospectuses must disclose the associated risks and summarize the nature and terms of the exemption.
The Ontario Securities Commission, acting as the principal regulator, has approved the exemption under the securities legislation, with the understanding that it meets the necessary legislative criteria. The decision also references the Process for Exemptive Relief Applications in Multiple Jurisdictions and Multilateral Instrument 11-102 Passport System for application across Canadian provinces and territories.