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RBC Global Asset Management Inc

2021-03-19 | Decision | 11-203, 81-101 | Investment funds and structured products | https://www.osc.ca/en/securities-law/orders-rulings-decisions/rbc-global-asset-management-inc-21

National Instrument 81-101 Mutual Fund Prospectus Disclosure, ss. 5.1(4) and 6.1


The Securities Commission has granted an exemption allowing the consolidation of the simplified prospectus (SP) of an alternative mutual fund with the SP of a conventional mutual fund. This decision is based on an application by RBC Global Asset Management Inc. (RBCGAM) on behalf of the Alternative Funds, which includes the BlueBay Global Alternative Bond Fund (Canada) and other alternative mutual funds managed by RBCGAM or its affiliates.

The exemption is from the requirement under section 5.1(4) of National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101), which normally prohibits the consolidation of SPs for alternative mutual funds with those of non-alternative mutual funds. The relief will allow the Alternative Funds to be included in the same SP documents as the RBC Mutual Funds, which are conventional mutual funds and not alternative mutual funds.

The rationale for the exemption includes cost reduction, streamlined distribution, and easier comparison of fund features for investors. The Filer argued that the operational and administrative features of the Alternative Funds are similar to those of the RBC Mutual Funds, and that consolidating the SPs would not be prejudicial to the public interest and would benefit the funds and their securityholders.

The decision notes that National Instrument 41-101 General Prospectus Requirements (NI 41-101) does not have a similar prohibition for exchange-traded funds (ETFs), suggesting that mutual funds should not be treated differently.

The exemption is contingent upon the Alternative Funds continuing to provide a fund facts document to investors and making the SP and/or AIF available upon request, as required by securities legislation.

The Ontario Securities Commission, acting as the principal regulator, approved the exemption after determining that it meets the test set out in the Legislation. The exemption applies across multiple jurisdictions in Canada.