Firm expands opportunity for investors to access award-winning strategy against rising-rate environment
As Canadian investors face challenges from inflation and the prospect of rising rates, CI Global Asset Management (CI GAM) has announced several changes to one of its best-performing strategies.
The firm has significantly reduced the management fee of its top-performing CI Floating Rate Income Fund. The maximum management fees of the Fund's Series F and A have been decreased by 40 basis points to flat fees of 0.35% and 0.85%, respectively.
According to CI GAM, the CI Floating Rate Income Fund will now have the lowest Series F management fee in its category.
From June 1, 2017 to January 31, 2022, the Fund was the best-performing fund in its category, having outperformed all others since its launch. It also garnered a five-star Morningstar Canada rating and was named the recipient of a FundGrade A+ Award for 2021.
The management fee changes, which were implemented immediately, are:
|
Fund Series |
Previous Maximum Management Fee |
New Flat Management Fee |
|
A |
1.25% |
0.85% |
|
F |
0.75% |
0.35% |
|
P |
0.75% |
0.35% |
|
E |
1.20% |
0.85% |
|
EF |
0.70% |
0.35% |
The firm has also unveiled plans to launch an ETF series of the fund. Subject to TSX clearance, CI GAM has filed a prospectus amendment to sell Canadian dollar-denominated ETF units of the Fund. They are planned to begin trading on the Toronto Stock Exchange on or about April 19, 2022 under the ticker symbol CFRT. A 0.35% management fee will be charged on the ETF units.
CI GAM is charging an administration fee for the fund series as well as the ETF units, which will range from 0.15% to 0.17%.
Marc-André Lewis, Head of Investment Management for CI GAM said, “This combination of performance and lower cost makes CI Floating Rate Income Fund a compelling choice for income investors in today’s environment.”
The CI Floating Rate Income Fund invests in higher-yielding floating rate debt assets such as bonds and loans, as well as short-term high-yield and investment grade bonds and floating rate preferred shares, to generate a consistent income stream.
Because interest rates on loans and floating rate bonds typically reset every three months, these products provide a hedge against rising interest rates. Fixed-income securities, such as government bonds, on the other hand, tend to fall in value as interest rates rise.
“Floating rate investments can diversify fixed-income portfolios and help to mitigate the impact of rising interest rates,” Lewis said. “Investors in the Fund also benefit from the deep expertise of the entire CI Global Asset Management fixed-income team, as our portfolio managers actively manage the allocations to asset classes and exercise deep due diligence in selecting individual holdings, which is crucial in managing high-yield securities.”
The capital markets currently expect the U.S. Federal Reserve and the Bank of Canada to each raise policy rates around six times this year, starting next month, to counter higher rates of inflation.
