(August 16 – 17:15 ET) – The Investment Funds Institute of Canada has published a summer newsletter outlining its recent activities.
IFIC has set up a working group to address the proposed move to T+1 clearing, and it is participating with the Canadian Capital Markets Association which has been formed to tackle the issue on a co-operative basis.
IFIC is endorsing the notion of capped indexes — indexes that restrict concentration in any one stock to 10%. Active fund managers are restricted to holding less than 10% of their portfolio in any one stock, and earlier this year IFIC petitioned the regulators to either lift the restriction or relax the requirement that they compare themselves with an index. The regulators refused, although they are proposing to lift the restriction for index funds so that they can track the TSE 300, which is now about 35% in Nortel Networks.
IFIC says that funds that wish to use a capped index as the benchmark for comparison in the prospectus should ensure that they meet the requirements of National Instrument 81-101. NI 81-101 states that a benchmark must be a broad-based securities market index administered by an independent organization.
IFIC staff are also currently preparing a bulletin articulating the standards for correction of portfolio net asset value errors — primarily that errors should be corrected retroactively. The standard states that the materiality threshold at which investor accounts should be corrected is 50 basis points of NAV. Investor accounts should be corrected if the error means more than $50 to an investor account.
On the education front, IFIC will be publishing a 500 word educational article each month, in both English and French, on the web site of the Canadian Community Newspaper Association. It is also participating in the YourMoney Network, a community of 11 web sites linked to provide students and teachers with Canadian financial information. The url is http://www.yourmoney.ific.ca.
-IE Staff