The Securities Commission has granted an exemption to CI Investments Inc. (CI) and its affiliates, allowing their managed investment funds to invest up to 10% of their net asset value in U.S. exchange-traded funds (ETFs) that are not index participation units (IPUs) and are regulated under the U.S. Investment Company Act of 1940. This decision replaces a previous decision from May 29, 2017, and accommodates changes in regulations and fund needs.
The exemption is subject to several conditions, including that the investments align with the funds’ objectives, do not exceed 10% of the fund’s net asset value, and that the U.S. ETFs are listed on a recognized exchange and in good standing with the SEC. Additionally, the funds cannot engage in short selling of the U.S. ETFs’ securities.
The rationale for the exemption includes providing funds with greater diversification, access to specialized expertise, and potentially enhanced returns. The decision is based on the premise that the U.S. ETFs offer broader exposure to asset classes than Canadian ETFs and that investing in them is an efficient and cost-effective way to gain such exposure.
The exemption is granted under the authority of National Instrument 81-102 Investment Funds, specifically paragraphs 2.2(1)(a), 2.5(2)(a), (a.1), and (c), and is contingent on disclosure of the exemption in the funds’ prospectuses.