Canada’s segregated funds industry has slowed in recent years, but analysts say that trend may be set to reverse given that it doesn’t have to abide by new securities regulations demanding greater fee transparency from mutual funds, its nearest competitor.
“This opens up the potential for regulatory arbitrage as insurance licensed investment advisers could recommend more seg fund product to their clients simply to lower the amount shown on the statement of charges,” said Paul Holden, analyst at CIBC World Markets, in a recent note to clients.
“While we would like to believe investor advisers would not behave as such, that may be wishful thinking.”
Mutual funds sold in Canada have come under increasing scrutiny from regulators in recent years and are now subject to enhanced fee disclosure requirements to comply with the ongoing second phase of the Canadian Securities Administrator’s client relationship model (better known as CRM2).
David Pett – FINANCIAL POST – April 21, 2015.
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