Firm announces proposed mergers, investment objective and risk rating changes, and termination
In its continued effort to rationalize its lineup of fund offerings, CI Global Asset Management (CI GAM) is proposing changes to its TSX-listed ETFs, including mergers and changes to investment objectives.
The following five ETF mergers, wherein each continuing ETF has the same or lower management and fixed administration fees or operating fees than the terminating ETF, have been proposed:
|
Terminating ETF |
Continuing ETF |
|
CI First Asset Morningstar Canada Dividend Target 30 Index ETF (DXM) |
CI WisdomTree Canada Quality Dividend Growth Index ETF (DGRC) |
|
CI First Asset Canadian Buyback Index ETF (FBE) |
CI WisdomTree Canada Quality Dividend Growth Index ETF (DGRC) |
|
CI First Asset U.S. Buyback Index ETF (FBU) |
CI WisdomTree U.S. Quality Dividend Growth Index ETF (DGR) |
|
CI First Asset European Bank ETF (FHB) |
CI First Asset Global Financial Sector ETF (FSF) |
|
CI First Asset Morningstar US Dividend Target 50 Index ETF (UXM, UXM.B) |
CI WisdomTree U.S. Quality Dividend Growth Index ETF (DGR, DGR.B) |
Aside from the proposed merger of CI First Asset European Bank ETF, all the proposed mergers will not result in a taxable disposition for unitholders, but the terminating ETFs may pay a distribution when the mergers take place. The proposed merger of CI First Asset European Bank ETF would be considered a disposition for tax purposes, with possible tax consequences for unitholders of the ETF.
Should a proposed merger not be approved, the applicable terminating ETF will be de-listed from the TSX on or about April 21, and terminated on or about April 22. As soon as practicable after the termination date, the terminating ETF will be liquidated and proceeds from the termination will be distributed pro rate among unitholders of record.
CI GAM is also proposing changes to four ETFs, which are intended to enhance the potential for diversification within each ETF and lead to greater efficiency, flexibility, and liquidity:
- CI First Asset Energy Giants Covered Call ETF (NXF, NXF.B);
- CI First Asset Gold+ Giants Covered Call ETF (CGXF);
- CI First Asset Health Care Giants Covered Call ETF (FHI, FHI.B); and
- CI First Asset Tech Giants Covered Call ETF (TXF, TXF.B)
Pending the required unitholder and regulatory approvals, the proposals will be implemented or approved on or about April 16, 2021.
Aside from the proposed changes, CI GAM has announced revisions to the risk ratings for certain series of three ETFs, based on the risk classification methodology mandated by the Canadian Securities Administrators (CSA):
|
Name |
Ticker |
Current Rating |
New Rating |
|
CI First Asset Energy Giants Covered Call ETF (Common Units) |
NXF |
Medium-to-High |
High |
|
CI First Asset Energy Giants Covered Call ETF (Unhedged Common Units) |
NXF.B |
Medium |
Medium-to-High |
|
CI First Asset Morningstar Canada Dividend Target 30 Index ETF (Common Units) |
DXM |
Low-to-Medium |
Medium |
|
CI First Asset Morningstar US Dividend Target 50 Index ETF (Unhedged Common Units) |
UXM.B |
Low-to-Medium |
Medium |
CI GAM is also terminating the CI First Asset Long Duration Fixed Income ETF (FLB) on or about April 22, 2021, and the firm will request that TSX de-list the units of the ETF on or about April 21. The net assets of the ETF will be liquidated and the proceeds will be distributed among unitholders on record as soon as possible following the termination date.
