The Ontario Securities Commission granted AGF Investments Inc. an exemption from certain short selling restrictions under National Instrument 81-102 Investment Funds (NI 81-102). This decision allows the AGF Alternative Income Credit Fund and future similar funds to short sell government securities up to 300% of their net asset value (NAV), exceeding the usual 50% limit. The exemption supports the fund’s hedging strategy, which involves taking long positions in corporate bonds and short positions in government bonds to mitigate interest rate risks. The Commission found that short selling government securities is less complex, less expensive, and less risky compared to using derivatives. The funds must comply with specific controls and disclosure requirements, ensuring that their aggregate exposure to short selling, cash borrowing, and derivatives does not exceed 300% of NAV. The decision is based on sections 2.6.1, 2.6.2, and 19.1 of NI 81-102.
