TORONTO, Feb. 14, 2019 (GLOBE NEWSWIRE) -- (TSX: EDGF.UN) Brompton Funds Limited (“Brompton” or the “Manager”), the manager of European Dividend Growth Fund (the “Fund”) is pleased to announce that at a special meeting of unitholders held today (the “Meeting”), unitholders of the Fund (the “Unitholders”) approved an extraordinary resolution to convert (the “Conversion”) the Fund into an exchange-traded fund (“Brompton European Dividend Growth ETF”) on or about April 16, 2019, or such other date as the Manager may determine in its sole discretion.
The Manager believes that Unitholders will benefit from the Conversion for the following reasons:
Lower Management Fee and Management Expense Ratio: The management fee payable by the Fund is currently 1.25% of the net asset value (“NAV”) plus applicable taxes until July 2020 and is 0.95% of the NAV plus applicable taxes thereafter. After the Conversion, the management fee payable by Unitholders will be 0.75% of the NAV of Brompton European Dividend Growth ETF. After the Conversion, the Manager also intends to waive a portion of the management fee of Brompton European Dividend Growth ETF and/or reimburse Brompton European Dividend Growth ETF to ensure that the sum of the management fee and operating expenses, in each case inclusive of associated GST/HST, is limited to approximately 0.95% of the NAV of Brompton European Dividend Growth ETF.
Enhanced Flexibility of the Investment Strategy: The Manager proposed to amend certain provisions in the Fund’s investment strategy to expand the Fund’s investment universe and allow for greater flexibility in Brompton European Dividend Growth ETF’s portfolio after the Conversion.
Better Trading Price Relative to NAV per Unit and Reduced Bid/Ask Spread: 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. As at December 11, 2018, prior to the announcement of the Meeting, the Fund had a 5.6% discount to NAV. Market makers for ETFs are able to price their bids and asks for ETF units very tightly around their estimate of NAV. It is expected that 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 a lower effective cost to buy or sell ETF units.
Increased Trading Liquidity: Approved dealers acting as market makers for an ETF are able to offer or bid for large volumes of that ETF on a stock exchange, as approved dealers have the ability to create or redeem ETF units daily in large blocks directly from Brompton European Dividend Growth ETF. This is expected to result in improved liquidity, allowing an investor to buy or sell large amounts of Brompton European Dividend Growth ETF units without materially affecting the market price. The Fund holds a portfolio of large capitalization, liquid equities and, therefore, it is expected that the Conversion will improve the trading liquidity of the Fund from current levels.
Potential for Lower Expenses per Unit due to Growth: As Brompton European Dividend Growth 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.
Details regarding the Conversion are available in the Fund’s management information circular dated January 14, 2019.
About Brompton Funds
Brompton Funds, a division of Brompton Group which was founded in 2000, is an experienced investment fund manager with over $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.
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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.