First Asset announces merger for investment trust. But what does it mean for investors?

An investment trust fund managed by the firm will be merged into one of its ETF products

An August 15 release from First Asset Management Inc. announces plans to merge a fund it manages, the Preferred Share Investment Trust, into its First Asset Preferred Share ETF product. The merger is anticipated to take place in October.

The First Preferred Share ETF, which is traded on the TSX under the ticker symbol FPR, has significantly similar investment objectives as the investment trust fund. The ETF’s objective is to provide investors with regular distributions and the opportunity for capital appreciation from the performance of a portfolio comprised primarily of preferred shares of North American issuers.
The ETF’s portfolio is managed by Signature Global Asset Management, a division of CI Investments.

Subject to applicable regulatory approvals, First Asset will merge the fund into the ETF in reliance on the Fund's pre-approved merger provisions. After the merger, unitholders of the fund will become unit owners of the ETF, with no action on their part required.

The firm cites three primary advantages, which they believe will result in benefits for unitholders:

  • Greater market liquidity and efficient trading
  • Lower management fees
  • Potential benefit from economies of scale

A notice will be mailed to all of the fund’s unitholders at least 60 days prior to the merger’s effective date. Those who do not wish to continue holding units of the ETF after the merger may redeem their units; notice of intent to redeem must be given before 5 PM on September 15.

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