The Securities Commission granted an exemption to investment funds managed by Desjardins Investments Inc., including the Desjardins Societerra Emerging Markets Bond Fund and future funds managed by the Filer or its affiliates, from the concentration restriction in subsection 2.1(1) of National Instrument 81-102 Investment Funds. This exemption allows the funds to invest beyond the usual 10% limit of net assets in debt securities issued or guaranteed by foreign governments or supranational agencies, subject to conditions.
Under the exemption, a fund may invest up to 20% of its net asset value in AA-rated debt securities of any single foreign issuer and up to 35% in AAA-rated debt securities of any single foreign issuer. These investments must be consistent with the fund’s fundamental investment objectives and traded on a mature and liquid market. The funds’ prospectuses must disclose the risks associated with such concentration and the details of the exemption, including the conditions imposed and the types of securities covered.
The decision is based on the belief that this flexibility will enable funds to better achieve their investment objectives, benefiting investors. The exemption is contingent on the funds maintaining investment objectives and strategies that allow for a majority investment in fixed income securities, including those of foreign governments.
The decision was made under the authority of section 19.1 of National Instrument 81-102, which is part of the securities legislation governing investment funds, and is consistent with the public interest and the best interests of the funds.