The Ontario Securities Commission granted an exemption to a mutual fund, allowing it to invest in a U.S.-based underlying mutual fund not governed by Canadian investment fund regulations. The exemption from National Instrument 81-102 Investment Funds (NI 81-102) permits the fund to invest up to 10% of its net asset value in the U.S. fund, which is regulated under the United States Investment Company Act of 1940. The decision is contingent on the investment aligning with the fund’s objectives and the U.S. fund being in good standing with the SEC. The fund must disclose this exemption in its prospectus. The exemption aims to provide benefits such as enhanced diversification and access to specialized expertise, without duplicating fees or posing significant investment risks.
