Is this conversion of mutual fund to ETF a good idea?

Citing benefits to unitholders, FT Portfolios has proposed to change one of the mutual funds it manages into an ETF

Is this conversion of mutual fund to ETF a good idea?

FT Portfolios Canada Co. has announced a proposal to convert the First Trust Canadian Capital Strength Portfolio, a mutual fund it manages, into an ETF.

According to the August 17 announcement, the conversion should provide holders of units in the fund with several benefits, including:

  • Lower Management Fees – the Manager will charge a lower management fee on the units of the Fund, as a result of efficiencies of the ETF fund structure and accordingly, the Fund's overall management expense ratio is expected to decline;
  • Market Liquidity – the units of the Fund are expected to trade on a stock exchange and therefore the units of the Fund will have secondary market liquidity for its units through a stock exchange listing; and
  • Increase of Asset Base – the Manager expects to be able to increase the asset base of the Fund as a result of the increased marketability and the trading liquidity of the Fund as an ETF.

Unitholders are invited to a special meeting to be held on September 20 to consider and vote on the proposal. A management information circular is being prepared and will be mailed to the unitholders of the Fund. It will also be available on the SEDAR website and posted on the First Trust Portfolios Canada website.

Pending fulfillment of all required regulatory approvals, the conversion is expected to be implemented in early November.

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