The Securities Commission granted an exemption to mutual funds managed by IG Investment Management Ltd. (IGIM) to invest in U.S. iShares ETFs that may allocate more than 10% of their net asset value (NAV) in U.S. Money Market Funds. This decision deviates from the standard restriction under paragraph 2.5(2)(b) of National Instrument 81-102 Investment Funds (NI 81-102), which typically limits such investments.
The exemption was based on several conditions, including consistency with the top funds’ investment objectives, the regulatory status of the U.S. iShares ETFs under the U.S. Investment Company Act, and the disclosure of this exemption in the funds’ prospectuses. The Commission’s decision was influenced by the similarity between U.S. and Canadian regulations governing money market funds and the oversight provided by the U.S. Securities and Exchange Commission (SEC).
The exemption is subject to the condition that the U.S. iShares ETFs will not invest more than 10% of their NAV in other investment funds, except for U.S. Money Market Funds or funds issuing index participation units. The decision ensures no duplication of management or incentive fees and limits potential losses to the amount invested in the U.S. iShares ETFs.
The Manitoba Securities Commission acted as the principal regulator, and the decision also applies to Ontario, with IGIM intending to rely on this exemption in multiple Canadian jurisdictions. The decision was made in accordance with the securities legislation of Manitoba and Ontario and is consistent with the test set out in the Legislation for the Decision Maker to make the decision.