Brompton Funds, the manager of European Dividend Growth Fund is to convert the fund into an ETF called Brompton European Dividend Growth ETF at the open of trading on the Toronto Stock Exchange on 23 April, 2019.
Unitholders of the Fund approved the Conversion at a special meeting held on 14 February, 2019. Commencing 23 April, 2019, the new ticker symbol of the ETF will be EDGF.
Following conversion, the management fee payable by the ETF will be reduced from the Fund’s current level of 1.25 per cent of net asset value (NAV) plus applicable taxes to 0.75 per cent of NAV plus applicable taxes. The Manager also intents to waive a portion of the management fee of the ETF and/or reimburse the ETF to ensure that the sum of the management fee and operating expenses, in each case inclusive of GST/HST, is limited to approximately 0.95 per cent of the NAV of the ETF.
The investment strategy of the ETF expands the fund’s investment universe and allows for greater flexibility in the ETF’s portfolio after the Conversion.
The Manager anticipates that an improvement in the trading price of the units of the Fund (relative to the NAV per unit of the Fund) will provide a meaningful increase in value for Unitholders. It is expected that the bid/ask spreads will be significantly reduced from the Fund’s bid/ask spread. This is beneficial to investors because a smaller bid/ask spread is expected to result in lower effective cost to buy or sell ETF units.
The ETF is expected to realise improved trading liquidity compared to the Fund’s previous levels. Investors are expected to be able to buy or sell large blocks of ETF units without substantially impacting the trading price of the ETF.
As the ETF will distribute units on a continuous basis, it will have the potential to increase the number of such units outstanding through the issuance of new units, thereby spreading its operating expenses across more units and reducing expenses per unit.
