Effective July 22, 2022, Canada Life Investment Management Limited (CLIML) will make pricing changes across its mutual fund shelf. These changes include reductions to management fees, simplified pricing for some investors in fee-based series (F Series) and more accessible high-net-worth pricing. The strength of our fund shelf continues to be a top priority for Canada Life and these changes reflect our commitment to ensuring our funds are priced competitively and are delivering value to our customers.
1. Optimized high-net-worth pricing structure
Effective July 22, 2022, we’re enhancing our high-net-worth pricing structure to help streamline the qualification criteria to make it more accessible for investors. Optimizing this pricing structure delivers added value for clients with higher asset amounts
Currently, to qualify for HNW pricing an investor must have $500,000 minimum total holdings (total household assets) and $100,000 minimum initial investment in a series. The $100,000 requirement will be reduced to $500 which aligns with the minimum investment for all retail series. The $500,000 minimum total holdings requirement will remain in place. This new eligibility criteria will apply to W, FW, QFW and N series (and applicable fixed rate distribution series).
To recognize the needs of clients with higher asset levels, a new management fee rebate will be introduced for investors with total holdings of $1 million+. This will apply to W, F, FW, and QFW (and applicable fixed rate distribution series). N series already benefits from banded management fee levels. The fee rebates have five bands, and as your total holdings cross each band, management fee rebates are applied to each dollar invested. Rebates are accrued daily and paid out quarterly.
2. Simplification and reduction of F Series pricing*
Management fees on all F Series mutual funds will be reduced to align with the equivalent FW Series effective July 22, 2022. Investors will benefit from greater value as the same competitive management and administration fee will be charged regardless of account size. Reductions vary by fund but will generally range from 10 to 40 basis points (bps).
Aligning the management fees across both F and FW Series allows us to eliminate the need for rebating investments between $100,000 and $499,999. This significantly simplifies our pricing structure, making it easier for advisors to do business with us and deliver competitive pricing to investors.
As part of this change, we will be making plans to redesignate FW Series into F Series so that going forward there will be only one series for all investors in our fee-based series (F Series). This redesignation will occur on or about September 16, 2022. During this interim period, pricing will be identical across F and FW Series.
* This change also applies to fixed rate distributions (F5, F8 and FW5, FW8, where offered)
View Canada Life Mutual funds fee changes3. Management fee reductions for three mutual funds
Effective on or about July 22, 2022, investment management fees are being lowered on certain series of three Canada Life mutual funds (Canada Life Canadian Core Plus Bond Fund, Canada Life Tactical Bond Fund and Canada Life Pathways Core Plus Bond Fund). No other changes are being made to the funds. These changes are driven by our commitment to regularly reviewing our investment management fees and continuing to deliver improved value for investors.
No action is required by you or your clients.
If investors had the minimum total holdings of $500,000 but did not have initial minimum of $100,000 per series, they would not have previously qualified for the HNW series. With the changes to the qualifications for HNW series effective July 22, 2022, these investors will qualify and will be automatically switched into the applicable Series W or Series QFW (or equivalent fixed rate distribution series) of the respective fund as outlined in the simplified prospectus (switches occur on or about the third Friday of every month).
Note that there will no longer be automatic switches into FW Series from F Series as investors in F Series will already benefit from the reduction in management fees to align with the respective HNW series.
There are no costs or tax implications associated with switches of different series of the same underlying fund.
The eligible investments to aggregate have not changed, investors can aggregate investments from the below list of eligible accounts to qualify for HNW series. To aggregate these eligible accounts, investors must fill out a Household Eligible Assets Form to enable the tracking of household eligible assets.
Eligible Investments:
- Canada Life Mutual Funds and Pathways mutual funds
- Segregated funds offered through Canada Life
- Guaranteed interest options (GIO) offered through Canada Life
- Client-held or nominee household assets
- Income annuities
No. After the redesignation of FW Series into F Series, the asset minimums for F Series fee-based accounts won’t change. The asset minimum of $100,000 of total eligible investments (excluding life and group policies) and $25,000 invested in F Series are Quadrus Investment Services Ltd. Requirements for fee-based accounts, not CLIML requirements, and will not be changing as a result of the above-mentioned changes.
Investors with assets greater than $1M in a HNW series (W, F, FW, QFW series) previously would not have qualified for any additional MFR. With the introduction of these new asset bands, depending on the fund, investors could receive up to 15 bps in MFR. Investors, new and existing, will automatically qualify for these MFR and will have them paid based on their account setup (i.e. as a cash distribution or reinvested). The below table outlines the various asset bands and how much each fund will receive from MFR.
There are no changes to the frequency or how MFR are paid. MFR are accrued daily and paid out quarterly. MFR will be paid out based on the investor preferences. For non-registered accounts, investors can receive the distribution in cash or reinvest into additional units of the underlying funds. For registered accounts (RRSP, TFSA, RRIF, etc.) the distributions will automatically be reinvested.
Effective on/or about August 2, 2022, there will be similar changes to Preferred Series 1, Preferred Series 2 and Preferred Partner Series. The qualification criteria for these HNW series will have the same changes whereby to qualify investors must have $500,000 in Total Holdings and will only need $500 per series (vs. prior qualification criteria of $100,000 per series). These segregated fund series will also benefit from a new asset band for those investors who have more than $10M in assets. This will apply to Preferred Series 1 and Preferred Partner Series (already available on Preferred Series 2). After the changes the asset bands for MFRs will be the same between mutual funds and segregated funds”
MFR received in high-net-worth series (and F Series) are available once investors have accumulated total holdings of eligible investments in excess of $1M. In these series, MFR are paid back to dollar one, meaning that every dollar invested in eligible investments will receive a MFR. For A Series and QF Series, MFR will be paid on each dollar between $100,000 and $499,999. Once assets reach $500,000, investors will be automatically switched to the respective W Series or QFW Series of the respective fund where they will benefit from HNW pricing. Eventually as those assets reach different asset bands investors will then further benefit from additional MFR.
We won’t be aligning management fees for other retail series with their high-net-worth series equivalents (i.e., A/W Series, and QF/QFW Series). Aligning F Series and FW Series supports an upcoming simplification of our series structure. These fee reductions are also reflective of a broader industry trend where F Series fees are becoming lower relative to other series as greater emphasis is placed on this growing distribution model. These changes will improve our positioning of F Series funds so that they are better suited for inclusion in client portfolios under recent regulatory changes such as Client Focused Reforms.
Yes, any investors in F Series (or other series of funds having a reduction to the management fee) will automatically be charged the reduced management fee as of the date it is effective. There is no action required by advisor or investors to benefit from these fee reductions.
Yes, all F Series and their respective fixed rate distribution series will benefit from these fee reductions.
After the fee reductions to F Series, the management fees will be aligned across both series eliminating any additional benefits of investing in FW Series. On or about September 16, 2022, we will simplify this pricing structure by redesignating FW Series to F Series.
No action is required for advisors or investors with the redesignation of FW Series into F Series as this will occur automatically.
Investors holding FW Series securities will be notified about the redesignation through a client letter in mid-August.
While you can place them in either series as they will both have the same fees (FW Series will not be capped), placing investors in F Series will avoid them from receiving notice about their investment being redesignated into another series.
After the redesignation of FW Series, this series will be closed and no longer available.
After the redesignation of FW Series to F Series, these services will continue into their equivalent F Series fund. No action is required on behalf of the advisor or investor.
There will be no costs, nor any tax implications associated with the redesignation of FW Series into F Series.
With the fee reductions on F Series, investors will now benefit from the lower pricing typically available in high-net-worth investments. There will no longer be MFR for investors with assets between $100,000 and $499,999. Investors in F Series who have larger asset levels will benefit from a new MFR when their assets reach $1M and will further benefit as those assets grow through the various asset band thresholds. These MFR will be applied back to the first dollar of investable assets.
Canada Life is committed to regularly reviewing our pricing across our entire fund shelf. No pricing changes to our segregated fund lineup are being announced at this time.
On or about August 2, 2022, Canada Life is making changes to our segregated funds High-Net-Worth (HNW) pricing structure and Automatic Switch Program. We are optimizing our HNW pricing structure to make it easier for clients to qualify for HNW pricing and deliver additional value to those clients with larger asset levels. We are also enhancing our Automatic Switch Program by including additional frequency options that will provide more customization to meet the unique needs of different clients. Ensuring we can offer clients value when investing their savings with us is of utmost importance for Canada Life. These changes reflect our commitment to ensuring our product offering continues to deliver value to our customers.
1. Optimized High-Net-Worth (HNW) pricing structure
Effective on or about Aug. 2, 2022, we’re enhancing our HNW pricing structure by making it more accessible to clients and delivering additional value for investors with higher asset levels.
Currently, to qualify for HNW pricing an investor must have $500K total holdings (total household assets) and $100K minimum initial investment per series. The $100K requirement will be reduced to $500 which aligns with the minimum investment for all retail series. The $500K minimum total household asset requirement will remain in place. This eligibility criteria will apply to Preferred Series 1, Preferred Series 2, and Preferred Partner Series.
To recognize the needs of investors with higher asset levels, we are adjusting the pricing structure to deliver greater management fee reductions as investor’s assets continue to grow with Canada Life. Going forward the segregated funds fee rebate program will be introducing a new asset band (band 6) at the $10 million+ asset threshold. This will apply to Preferred Series 1 and Preferred Partner Series (already available on Preferred Series 2). As your total holdings cross each band, reductions are applied to each dollar invested. Rebates are accrued daily and paid out quarterly.
2. Additional frequency options for Automatic Switch Program/Dollar Cost Averaging
Effective on or about Aug. 2, 2022, there will be two additional frequency options – weekly and bi-weekly. This will provide investors with greater ability to customize investment strategies to meet their unique situation and to further benefit from dollar cost averaging.
Current frequency options that remain available are – monthly, bi-monthly, quarterly, semi-annually and annually.
If investors had the minimum total holdings of $500,000 but did not have initial minimum of $100,000 per series, they would not have previously qualified for the HNW series. With the changes to the qualifications for HNW series effective on/or about Aug. 2, 2022, these investors will qualify for Preferred Series 1 (PS1), Preferred Series 2 (PS2), and Preferred Partner Series (PPS). Investors in Standard Series or Partner Series will be automatically moved into the equivalent HNW series of their respective segregated funds on a periodic basis as outlined in the information folder (there is no equivalent retail series for Preferred Series 2).
There are no tax implications associated with switches from retail series to their respective HNW series of the same underlying fund (i.e, Standard Series switching to PS1 and Partner Series switching to PPS).
The eligible investments to aggregate have not changed, investors can aggregate investments from the below list of eligible accounts to qualify for HNW series. To aggregate these eligible accounts, investors must fill out a Household Eligible Assets Form to enable the tracking of household eligible assets.
Eligible Investments:
- Segregated funds offered through Canada Life
- Canada Life Mutual Funds and Pathways mutual funds
- Guaranteed interest options (GIO) offered through Canada Life
- Client-held or nominee household assets
- Income annuities
Investors with assets of $10million+ previously would not have qualified for any additional MFR. With the introduction of this new asset band, depending on the fund, investors could receive up to 20 basis points. Investors will automatically qualify for these MFR once certain conditions are met. The rebate will be calculated daily on the investment management fee and allocated to each applicable segregated fund as additional units at the end of each quarter, or when a full redemption or switch occurs. The below table outlines the various asset bands and how much each fund will receive from MFR.
MFR received in high-net-worth series (PS1 and PPS) are available for certain funds once investors have accumulated total holdings of eligible investments in excess of $1M. In these series, MFR are paid back to dollar one, meaning that every dollar invested in eligible investments will receive MFR. For Standard Series and Partner Series, MFRs will only be paid on each dollar between $100,000 and $499,999. Once assets reach $500,000, investors will be automatically switched to the respective PS1 or PPS of the respective fund where they will benefit from HNW pricing. Eventually as those assets reach different asset bands investors will then further benefit from additional MFR.
There are no changes to frequency or how management fee rebates are paid. MFR are accrued daily and paid out quarterly.
The Automatic Switch Program allows policyholders to switch a set amount from one segregated fund to another or multiple segregated funds in the policy. These new frequencies will provide investors with greater ability to customize investment strategies to meet their unique situation and to further benefit from dollar cost averaging.
Yes, the two additional frequency options will appear on applications and on Investment Centre with the other frequencies available (weekly, bi-weekly, monthly, bi-monthly, quarterly, semi-annually and annually.)