The Securities Commission has granted an exemption to mutual funds managed by Northwest & Ethical Investments L.P. (NEI) from certain provisions of National Instrument 81-102 Investment Funds (NI 81-102). This exemption allows these funds to invest up to 10% of their net asset value in commodity exchange-traded funds (ETFs) listed on U.S. stock exchanges, which do not qualify as index participation units and aim to replicate the performance of certain permitted precious metals or related derivatives on an unlevered basis.
The key conditions of the exemption are:
– Investments must align with the fund’s fundamental investment objectives.
– The ETFs must be traded on a U.S. stock exchange.
– Post-transaction, no more than 10% of the fund’s net asset value can be invested in such ETFs.
– The fund’s total exposure to physical commodities cannot exceed 10% of its net asset value.
– The fund’s simplified prospectus must disclose the relief obtained, explain the nature of the ETFs, state the possibility of indirect investment in permitted precious metals, and outline the associated risks.
The decision is based on representations by NEI that the investments will be made with sound business judgment and that regulatory concerns such as undue risk, liquidity, and transparency are mitigated by the liquidity and regulatory environment of U.S. exchanges, as well as the limited scope of the investment. The exemption is contingent upon these conditions being met and disclosed in the fund’s prospectus.