CIFSC proposes two new investment-fund categories

With domestic interest growing in international dividends and income, U.S. and global dividend funds could soon have their own investment-fund categories.

The Canadian Investment Funds Standards Committee (CIFSC) has proposed adding US Dividend & Income Equity and Global Dividend & Income Equity to its fund category listing.

“The rising interest and need for both income and non-domestic investments presents an opportunity for CIFSC to carve out funds with these characteristics from the two largest equity categories on our platform: US and Global Equity,” the committee stated in its request for comment.

Among other criteria, funds in the new U.S. category must have a mandate to invest primarily in income-generating securities and must invest at least 90% of their equity holdings in securities domiciled in the U.S.

Similarly, funds in the Global Dividend & Income Equity category must have a mandate to invest primarily in income-generating securities and must invest more than 10% and less than 90% of their equity holdings in Canada or the U.S.

Funds that would be affected by the new U.S. category are currently classified as U.S. equity, while funds that would be affected by the new global category are currently classified as global equity. Manufacturers would be given the opportunity to dispute a reclassification if it occurs.

The CIFSC also is revisiting Multi-Sector Fixed Income, a category that launched in March and has grown to about 80 funds. The committee proposes to add a high-yield threshold of 40% to the category’s definition, and move funds that have high-yield allocations in excess of that to the existing High Yield category.

The CIFSC estimates this would affect 15 investment funds. Again, manufacturers would be given the opportunity to dispute a reclassification if it occurs.

The comment period closes Dec. 1.

Melissa Shin

Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip.