The Securities Commission granted an exemption to Vanguard Investments Canada Inc. from certain requirements of National Instrument 81-102 Investment Funds (NI 81-102) regarding sales communications. Specifically, the exemption allows the mutual funds managed by Vanguard or its affiliates to reference FundGrade A+ Awards and FundGrade Ratings in their sales communications without adhering to the standard performance data matching and timing requirements stipulated in paragraphs 15.3(4)(c) and (f) of NI 81-102.
Under normal circumstances, NI 81-102 requires that any performance rating or ranking included in sales communications must match the standard performance data periods (excluding the period since inception) and be up-to-date within specific time frames. However, the FundGrade Ratings and A+ Awards, provided by Fundata Canada Inc., do not align with these requirements as they are based on different time periods and are not updated within the prescribed time frames.
The exemption was granted on the condition that the sales communications comply with other aspects of Part 15 of NI 81-102 and include clear disclosures about the nature of the FundGrade Ratings and A+ Awards, the number of funds in the category, the rating entity, the period the rating or award is based on, and a statement that ratings are subject to change monthly. Additionally, the A+ Awards referenced must not be more than 365 days old, and the ratings must be based on performance comparisons within categories established by the Canadian Investment Funds Standards Committee (CIFSC) or its successor.
The decision was made in accordance with section 19.1 of NI 81-102, which allows for exemptions from the instrument’s requirements, and the process was facilitated by the Multilateral Instrument 11-102 Passport System, with the Ontario Securities Commission acting as the principal regulator.