Middlefield Group is launch of a platform of ETFs that it says will provide investors with professional active management within a cost-effective, investor-friendly structure.
The platform will include unique thematic investment strategies that are underrepresented in Canadian portfolios or difficult for investors to gain exposure to when using existing passive investment strategies.
The platform will be established initially by converting two successful closed-end funds managed by Middlefield, Middlefield Healthcare & Life Sciences Dividend Fund and REIT INDEXPLUS Income Fund, which together represent approximately CAD150 million in assets.
Middlefield Healthcare & Life Sciences Dividend Fund (TSX:LS.UN) will become Canada’s first actively managed diversified healthcare ETF. It invests in the securities of global healthcare and life science issuers. Dean Orrico, Middlefield’s President and Chief Investment Officer, is the lead portfolio manager of the fund and Dr. Richard Evans of SSR LLC acts as industry advisor to Middlefield. Investment in the healthcare sector is underrepresented in Canada as compared to other sectors, making up just 2 per cent of the S&P/TSX Composite Index. The Fund pays a monthly distribution and has outperformed both the S&P/TSX Composite Index and its benchmark since inception.
The REIT INDEXPLUS Income Fund (TSX:IDR.UN) provides investors with low-cost exposure to the real estate sector through a combination of indexing and active portfolio management. Orrico is also the lead portfolio manager of REIT Indexplus and maintains that “REITs are amongst the most attractive equity income vehicles available to investors providing compelling risk-adjusted returns during both up and down markets”.
Special meetings of the funds will be held on 10 December 2018 at which unitholders of each fund as of 7 November 2018 will be asked to approve its conversion into an ETF. Further details of the meetings and the proposals of Middlefield Limited, manager of the Funds will be provided in a joint information circular to unitholders.
If approved, the manager anticipates implementing the two conversions by early 2019. All costs of the conversions, including the cost of the meetings, will be borne by the manager. Each of the funds will continue to be managed in the same fashion by Middlefield’s experienced portfolio management team. The conversions to ETFs will not be taxable events for unitholders of the funds. Each of the funds will continue to trade on the TSX under its current ticker symbol until conversion.