CSA Publishes New Mutual Fund Industry Proposals

 Canadian Securities Administrators (CSA) published a consultation paper of interest to investors of mutual funds. The paper contained three main proposals, all aimed at enhanced client protection.

You can read our detailed breakdown here.

Weekly Market Wrap-Up

North America

• The TSX closed at 16450, up 136 points or 0.83% over the past week. YTD the TSX is up 1.49%.
• The DOW closed at 24581, down -510 points or -2.03% over the past week. YTD the DOW is down -0.56%.
• The S&P closed at 2755, down -24 points or -0.86% over the past week. YTD the S&P is up 3.03%.
• The NASDAQ closed at 7693, down -53 points or -0.68% over the past week. YTD the Nasdaq is up 11.44%.
• Gold closed at 1271, down -21.00 points or -0.94% over the past week. YTD gold is down -2.98%.
• Oil closed at 69.28, up 4.85 points or 7.53% over the past week. YTD oil is up 14.66%.
• The USD/CAD closed at 0.75, down -0.0079 points or -1.04% over the past week. YTD the USD/CAD is down -5.70%.
• The MSCI closed at 2106, down -36 points or -1.68% over the past week. YTD the MSCI is up 0.14%.

Europe/Asia

• The Euro Stoxx 50 closed at 3442, down -63 points or -1.80% over the past week. YTD the Euro Stoxx 50 is down -1.77%.
• The FTSE closed at 7682, up 48 points or 0.63% over the past week. YTD the FTSE is down -0.08%.
• The CAC closed at 5387, down -115 points or -2.09% over the past week. YTD the CAC is up 1.39%.
• DAX closed at 12580, down -431.00 points or -3.31% over the past week. YTD DAX is down -2.62%.
• Nikkei closed at 22517, down -335.00 points or -1.47% over the past week. YTD Nikkei is down -1.09%.
• The Shanghai closed at 2890, down -132.0000 points or -4.37% over the past week. YTD the Shanghai is down -12.61%.

Fixed Income

• The 10-Yr Bond Yield closed at 2.9, down -0.0200 points or -0.68% over the past week. YTD the 10-Yr Bond Yield is up 20.83%.

Sources: Mackenzie, Advisor.ca, Dynamic

The post Weekly Update – June 22, 2018 appeared first on Smof Investment Manager, LLC.

Prohibiting Deferred Sales Charge and Low Service Charge Loads

Once a staple of the mutual fund industry, many advisors have begun to move away from DSC and LSC, as investment flexibility can be affected. Smof Investment has been in the process of transitioning away from DSC and LSC fund loads for the last three years. Note that existing positions held in DSC or LSC funds cannot be moved to Front-End Load (FEL) until the funds have matured.

Related to this proposal, the CSA has signalled that embedded    compensation is here to stay, provided the fund’s embedded load structure is the unlocked FEL with no upfront commission.

Prohibiting Trailing Commissions Sold Via Discount Brokerages

Discount brokerages’ business model is a do-it-yourself investment style, so CSA has proposed that advisor compensation should not be paid for any such investment setups.

Firms and advisors will be able to continue to offer clients mutual funds with trailing commissions, provided certain targeted reforms (point 3 below) are met.

Enhanced Conflict of Interest Scrutiny

As advisors, it is our job to put the client first. The CSA proposes heightened scrutiny as part of targeted reforms to demonstrate that both the fund selection and client recommendation are based on the quality of the mutual fund, without influence from the embedded commission.

The targeted reforms also propose changes to the know-your-client (KYC), know-your-product (KYP) and suitability obligations.

If you have any questions about these proposals and how they might affect your investments, don’t hesitate to contact us.

Sources: Mackenzie Investments, Advisor.ca

The post CSA Publishes New Mutual Fund Industry Proposals appeared first on Smof Investment Manager, LLC.