Purpose converts income fund into open-end fund

Purpose converts income fund into open-end fund

Purpose converts income fund into open-end fund

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.\

 

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