The Securities Commission has granted an exemption to investment funds managed by Invesco Canada Ltd., allowing them to invest up to 10% of their net assets in Luxembourg mutual funds regulated by the Commission de Surveillance du Secteur Financier (CSSF). This exemption supersedes previous decisions from 2012 and 2018, which were specific to certain funds and their ability to invest in particular Luxembourg SICAV Funds.
Under National Instrument 81-102 Investment Funds (NI 81-102), Canadian mutual funds are generally restricted from investing in foreign funds that are not subject to the same regulations. However, the Commission has determined that the regulatory framework governing the Luxembourg funds is substantially similar to Canadian requirements, justifying the exemption.
The exemption is conditional upon several factors:
1. The investments must be consistent with the Canadian funds’ objectives and strategies.
2. The Luxembourg funds must qualify as UCITS (Undertakings for Collective Investments in Transferable Securities) and comply with EU Directives and UCITS Regulations.
3. The Canadian funds must not invest more than 10% of their net assets in the Luxembourg funds, and the Luxembourg funds themselves must not hold more than 10% of their assets in other SICAV Funds.
4. The prospectus for the Canadian funds must include all required disclosures for funds investing in other funds.
5. The exemption will be revoked if there are material changes to the regulatory regime of the Luxembourg funds.
This decision allows for greater investment flexibility and potential diversification benefits for Canadian funds, while ensuring that the investments remain within a framework of regulatory oversight comparable to that of Canada.