Middlefield Group is expanding its ETF platform with the proposed conversion of Middlefield Healthcare & Wellness Dividend Fund (Wellness Fund) and American Core Sectors Dividend Fund.
In keeping with our objective of providing value-added solutions to investors and financial advisors, these additions to our ETF platform represent unique, actively managed strategies which investors would have difficulty replicating with passive investment products.
Reduced management fee: Upon completion of the Conversions, Wellness Fund and Core Fund unitholders will see substantial management fee reductions from 1.1 per cent to 0.85 per cent and 0.75 per cent, respectively.
Larger asset base improves liquidity and lowers costs: Since ETFs are in continuous distribution, there is the potential for ongoing growth opportunities and the further reduction of expenses, as a percentage of assets, through greater scale.
With a designated broker acting as a market maker, ETF units trade efficiently with tighter bid/ask spreads and closer to their net asset value.
The Wellness Fund expands on Middlefield’s proven track record of active management in the healthcare sector. Dean Orrico, Middlefield’s Chief Investment Officer, is the lead portfolio manager of the Wellness Fund, with Dr Richard Evans of SSR LLC acting as an industry advisor to the fund.
The Core Fund provides investors with a diversified, actively managed portfolio comprised of dividend paying securities within core US sectors. Robert Lauzon, Middlefield’s Deputy Chief Investment Officer, is the lead portfolio manager of the Core Fund, which has outperformed both the S&P/TSX Composite Index and its benchmark since inception.
Special meetings of both funds will be held on 17 May, 2019, at which unitholders of record for each fund as of April 11, 2019 will be asked to approve the conversion of the applicable fund 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 Conversions by late May 2019. All costs of the Conversions, including the cost of the meetings, will be borne by the Manager. Following the Conversions, the funds will continue to be actively managed by Middlefield’s experienced portfolio management team. Both funds will continue to trade on the TSX under their current respective ticker symbol until Conversion. The Conversions to ETFs will not be taxable events for unitholders of the funds.