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Matrix launches Canada’s first licensed DJ Canada High Dividend 50 Index product


Matrix Funds Management has launched Canada’s first licensed Dow Jones Canada High Dividend 50 Index product.

The Matrix Dow Jones Canada High Dividend 50 Fund (Corporate Class) is designed to closely match the returns and characteristics of the new Dow Jones Canada High Dividend 50 index, combining high dividend paying companies with four fundamental based quality factors in a composite approach.

"We listened to advisors and saw a need in the high dividend equity income market," says David Levi ( pictured), CEO. "This index could become the benchmark for High Dividend equity income in Canada. The strategy has significant appeal with its focus on current and former income trusts and we are confident investors will agree."

The fund combines the power of Exchange-Traded Funds or ETFs with the convenience and broad accessibility of mutual funds in a tax beneficial corporate class structure. "This combination of desirable features has created a unique Canadian investment vehicle, allowing us to bring new choices based on sound investment principles to investors," says Grahame Lyons, Managing Partner.

The fund has low cost, portfolio transparency and tax efficiency which are common attributes of popular ETFs.

"Based on our research, the fund will solve some trading related issues for securities licensed advisors (IIROC) and investment counsellors (ICPM)," adds Lyons. The product is also expected to meet demand from the larger body of mutual fund advisors (MFDA) and eligible insurance licensed advisors looking for these features in providing financial services to Canadians.

Moreover, the tax deferral opportunity of a Corporate Class share structure means investors with taxable accounts can defer capital gains taxes that would otherwise have been payable on redemption if they are switching into other Matrix corporate class funds. This can add significantly to investor returns after tax over time.

According to recent research on Canadian Equity sectors, Energy High Yield returned 19.3% compared to 14.7% for TSX Energy, Financials High Yield returned 18.7% compared to 14.5% for TSX Financials and Materials High Yield returned 12.0% compared to 9.0% for TSX Materials index (all figures total return, from December 1995 to December 2010.

The new Dow Jones Canada High Dividend 50 Index is what Matrix Funds considers a "smart indexing" solution. "Combining traditional indexing with fundamental factors that active fund managers consider to measure yield quality is well suited for this monthly income product," says Lyons.

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