The conversion resulted in a lower management fee, more frequent distributions, and an expanded mandate
Purpose Investments has converted the Purpose Global Financials Income Fund, which had been listed on the TSX as “PFG.UN”, into an open-end fund with ETF units and mutual fund units. The Class A units of PFG.UN have been delisted from the TSX; ETF units of the open-end fund have been listed under the ticker symbol “PFG”.
Holders of PFG.UN do not have to take any action to become PFG unitholders. Those who hold class A units of PFG.UN are automatically entitled to one ETF unit of PFG for each class A unit of PFG.UN they hold. Similarly, those with non-trading class F units of PFG.UN will automatically receive one class F unit of Purpose Global Financials Income Fund for each of their Class F units of PFG.UN.
New class A units of the open-end fund will also be created for non-fee-based advisors.
According to Purpose, PFG.UN unitholders should benefit from the conversion in several ways:
- The management fee on PFG has been set at 0.55% per annum, compared to the 1.05% fee for PFG.UN;
- The ETF units are expected to trade efficiently and close to their net asset value, resulting in enhanced liquidity;
- PFG will pay monthly distributions, as compared to the quarterly payment schedule of PFG.UN;
- PFG’s investment objective has been broadened to include not just common shares of Australian banks, but global financial services companies, leading to improved diversification and attractive income;
From a tax perspective, the conversion will also not result in a disposition of units by holders of PFG.UN, which means no embedded gain will be realized.\