Mergers announced for three liquid-alt ETFs to result in continuing funds with dual-class structure
CI Investments is planning to merge some of its ETFs into other investment funds with identical mandates as it continues to modernize and streamline its fund lineup.
The mergers, which will take effect on or about January 15, pertain to three of its liquid-alternative ETF offerings:
- CI Lawrence Park Alternative Investment Grade Credit ETF (TSX: CRED, CRED.U), to be merged into CI Lawrence Park Alternative Investment Grade Credit Fund;
- CI Marret Alternative Absolute Return Bond ETF (TSX: CMAR, CMAR.U), to be merged into CI Marret Alternative Absolute Return Bond Fund; and
- CI Munro Alternative Global Growth ETF (TSX: CMAG), to be merged into CI Munro Alternative Global Growth Fund.
The continuing fund from each merger will have a dual-class structure that offers both mutual fund and ETF series.
In its statement announcing the mergers, CI said the dual-class structure will result in a raft of benefits including reduced duplication of funds, a more simplified fund lineup, larger funds with greater economies of scale and portfolio diversification opportunities, and increased consistency of fund performance between fund structures with the same mandates.
The fixed administration fee that each continuing fund pays to CI will be the same as or lower than the operating expenses currently paid by each merging ETF, the statement said. With a fixed administration fee, funds can have greater predictability and transparency in their MER, as well as protection from potential increases in future operating expenses, CI said.
After the mergers, securityholders of the merging ETFs will receive ETF Canadian dollar series units or ETF US-dollar series units of the continuing fund, as appropriate. They’ll face no taxable disposition resulting from the mergers, though the funds may pay a distribution at that time.