TORONTO, July 16, 2018 (GLOBE NEWSWIRE) -- (TSX:FFI.UN) Brompton Funds Limited (“Brompton” or the “Manager”), announces a special meeting (the “Meeting”) of holders of units (the “Unitholders”) of Flaherty & Crumrine Investment Grade Fixed Income Fund (the “Fund”). The purpose of the Meeting is to consider and vote upon an extraordinary resolution to implement amendments to the investment objectives, investment strategies and investment restrictions of the Fund and to update and modernize the Fund’s constating documents (the “Amendments”).
The Fund has been assigned an investment grade rating by Standard & Poor’s. The Fund’s current investment objectives are to provide unitholders with a stable stream of monthly distributions, to mitigate the impact of significant interest rate increases on the value of the portfolio, to preserve the net asset value per unit and to enhance the total return per unit by actively managing the portfolio. To achieve these objectives, the Fund currently invests in a portfolio of fixed income securities consisting primarily of US-dollar-denominated corporate debt and preferred securities of North American issuers that have an investment grade rating at the time of purchase. Substantially all of the US dollar foreign exchange exposure of the Fund’s portfolio is hedged to the Canadian dollar. The Fund’s portfolio manager, Flaherty & Crumrine Incorporated specializes in US dollar denominated preferred securities and corporate debt instruments and uses intensive credit analysis, thorough analysis of securities' terms and structures and active portfolio management, exploiting pricing inefficiencies in the fixed income market to provide attractive rates of return on its funds. The Fund has generated an 8.4% per annum return over the last 5 years and a 9.8% per annum return over the past 10 years to June 30, 2018.(1)
The Manager believes that the Fund is an attractive way to invest in an actively managed portfolio of US-dollar-denominated corporate debt and preferred securities of North American issuers. However, since the Fund was launched at the end of 2004, the size of the preferred securities market in which it invests and, in particular preferred securities which are rated investment grade, has become smaller. The preferred securities market has changed over the past decade largely due to changes to regulatory capital rules following the 2008 credit crisis. The Manager believes that certain changes are therefore advisable to the investment objectives, strategy and restrictions which will expand the investment universe and the investment opportunities available to the Fund while maintaining the Fund’s overall investment grade rating. The Manager believes that the proposed changes should enhance long-term returns and are in the best interests of Unitholders.
The proposed changes to the investment objectives, strategy and restrictions are primarily designed to expand the investable universe of corporate debt and preferred securities from which the portfolio manager can select by allowing the Fund to purchase securities that may have a non-investment grade rating at the time of purchase, while still maintaining a high quality portfolio and the Fund’s overall investment grade rating.
The special meeting of Unitholders will be held on August 29, 2018 to consider and vote on the proposed Amendments. Unitholders of record at the close of business on July 30, 2018 will be entitled to vote at the meeting. If approved, the Manager expects the effective date of the Amendments to take place shortly after the meeting. Details of the proposed Amendments will be further outlined in the notice of meeting and management information circular that will be prepared and delivered to Unitholders in connection with the special meeting and will be available on www.sedar.com.
About Brompton Funds
Brompton Funds, a division of Brompton Group which was founded in 2000, is an experienced investment fund manager with approximately $2 billion in assets under management. Brompton’s investment solutions include TSX traded funds, mutual funds and flow-through limited partnerships. For further information, please contact your investment advisor, call Brompton’s investor relations line at 416-642-6000 (toll-free at 1-866-642-6001), email info@bromptongroup.com or visit our website at www.bromptongroup.com.
(1) See performance table below.
| Compound Annual Return | 1 Year | 3 Years | 5 Years | 10 Years | Since Inception |
| Performance as at June 30, 2018* | Dec. 15/04 | ||||
| Flaherty & Crumrine Investment Grade Fixed Income Fund | (1.4)% | 6.4% | 8.4% | 9.8% | 5.4% |
| ICE BofAML Hybrid Preferred Securities 8% Constrained Index | 2.5% | 6.5% | 6.6% | 7.3% | 4.8% |
| ICE BofAML US Capital Securities US Issuers 8% Constrained Index | 1.8% | 4.4% | 5.5% | 7.3% | 5.1% |
*The table shows the Fund’s compound total return (assuming reinvestment of distributions) for each period indicated compared with the return for the ICE BofAML Hybrid Preferred Securities 8% Constrained Index (“Hybrid Preferred Securities Index”) and the ICE BofAML US Capital Securities US Issuers 8% Constrained Index (“Corporate US Capital Index”). The Hybrid Preferred Securities Index includes taxable, fixed rate, US-dollar-denominated, investment grade preferred securities listed on a US exchange and structured for retail investors. The Corporate US Capital Index includes investment-grade, fixed rate or fixed-to-floating rate $1,000 par securities that are structured for institutional investors and that receive some degree of equity credit from the rating agencies or their regulators. Since the Fund is actively managed, the sector weightings and credit ratings may differ from those of the indices. The indices are also not leveraged, whereas the Fund employs leverage. Further, the indices are calculated without the deduction of management fees, fund expenses and trading commissions, whereas the performance of the Fund is calculated after deducting such fees and expenses.
The benchmarks from ICE Data Indices, LLC (“ICE Data”) are used with permission. ICE Data, its affiliates and their respective third party suppliers disclaim any and all warranties and representations, express and/or implied, including any warranties of merchantability or fitness for a particular purpose or use, including the indices, index data and any data included in, related to, or derived therefrom. Neither ICE Data, its affiliates nor their respective third party providers shall be subject to any damages or liability with respect to the adequacy, accuracy, timeliness or completeness of the indices or the index data or any component thereof, and the indices and index data and all components thereof are provided on an “as is” basis and your use is at your own risk. ICE Data, its affiliates and their respective third party suppliers do not sponsor, endorse, or recommend the Fund.
You will usually pay brokerage fees to your dealer if you purchase or sell units of an investment fund on the Toronto Stock Exchange or other alternative Canadian trading system (an “exchange”). If the units are purchased or sold on an exchange, investors may pay more than the current net asset value when buying units of an investment fund and may receive less than the current net asset value when selling them.
There are ongoing fees and expenses associated with owning units of an investment fund. An investment fund must prepare disclosure documents that contain key information about the Fund. You can find more detailed information about the Fund in the public filings available at www.sedar.com. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account certain fees such as redemption costs or income taxes payable by any securityholder that would have reduced returns. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.
Certain statements contained in this news release constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to matters disclosed in this press release and to other matters identified in public filings relating to the Fund, to the future outlook of the Fund and anticipated events or results and may include statements regarding the future financial performance of the Fund. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue” or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Investors should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and we assume no obligation to update or revise them to reflect new events or circumstances.