February 23, 2023
IN THE MATTER OF THE SECURITIES LEGISLATION OF
ONTARIO
(the Jurisdiction)
AND
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IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF Brandes Investment Partners & Co.
(the Filer)
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DECISION
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## Background
The principal regulator in the Jurisdiction has received an application from the Filer, on behalf of the Fund (as defined below), for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) exempting the Fund from the following provisions of National Instrument 81-102 Investment Funds (NI 81-102), in order to permit the Fund to invest in securities of the Underlying Fund (as defined below), which is not an investment fund subject to NI 81-102, whose securities are not or have not been offered under a simplified prospectus in accordance with National Instrument 81-101 Mutual Fund Prospectus Disclosure (NI 81-101) and which is not a reporting issuer in a local jurisdiction:
a) paragraph 2.5(2)(a) to permit the Fund to invest in securities of the Underlying Fund even though the Underlying Fund is not subject to NI 81-102; and
b) paragraph 2.5(2)(c) to permit the Fund to invest in securities of the Underlying Fund even though the Underlying Fund is not a reporting issuer in any Canadian Jurisdiction (as defined below)
(collectively, the Exemption Sought)
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application, and
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of the other provinces and territories of Canada (together with Ontario, the Canadian Jurisdictions).
## Interpretation
Terms defined in MI 11-102, NI 81-102, National Instrument 14-101 Definitions and National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) have the same meaning if used in this decision, unless otherwise defined.
Fund means T. Rowe Price Global Allocation Fund;
Investment Company Act means the United States Investment Companies Act of 1940.
T. Rowe Price means T. Rowe Price (Canada), Inc.
Underlying Fund means T. Rowe Price Dynamic Global Bond Fund.
## Representations
This decision is based on the following facts represented by the Filer:
### The Filer
[1] The Filer is a corporation incorporated under the laws of Nova Scotia with its registered head office in Toronto, Ontario. The Filer operates under the retail trade name Bridgehouse Asset Managers.
[2] The Filer is registered as: (a) an investment fund manager in Ontario, Quebec, and Newfoundland and Labrador; (b) as a portfolio manager in each of the Canadian Jurisdictions; and (c) as an exempt market dealer in each of the Canadian Jurisdictions.
[3] The Filer or an affiliate of the Filer acts or will act as the manager of the Fund.
[4] The Filer is not in default of securities legislation is any of the Canadian Jurisdictions.
### The Fund
[5] The Fund is an investment fund organized and governed by the laws of Ontario.
[6] The Fund is governed by the applicable provisions of NI 81-102, subject to any exemptions therefrom that have been, or may in the future be, granted by the securities regulatory authorities.
[7] The Fund is a reporting issuer in all of the Canadian Jurisdictions.
[8] The Fund is subject to NI 81-107.
[9] The fundamental investment objective of the Fund is to achieve a combination of long-term capital appreciation and income by investing in a broadly diversified global portfolio that includes global stocks, bonds and short-term securities, and alternative investments.
[10] T. Rowe Price became the sub-advisor of the Fund on January 30, 2023. T. Rowe Price is currently registered as a portfolio manager and exempt market dealer in each of Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador (where it is also registered as an investment fund manager), Nova Scotia, Ontario (where it is also registered as an investment fund manager), Prince Edward Island, Québec (where it is also registered as an investment fund manager) and Saskatchewan.
[11] The Fund will be based on an existing T. Rowe Price strategy called the “T. Rowe Price Global Allocation” strategy which T. Rowe Price manages in a mutual fund format in the United States and a SICAV format in Europe. In either format (the U.S. mutual fund or the SICAV) T. Rowe Price will invest up to 10% of a fund’s assets in the Underlying Fund (or in the case of the SICAV, the underlying SICAV equivalent to the Underlying Fund) in order to gain exposure to a global fixed income mandate that requires a large amount of capital to manage effectively. T. Rowe Price would like to implement the same approach for the Fund by investing up to a maximum of 10% of the Fund’s total assets in the Underlying Fund.
[12] The Fund is not in default of applicable securities legislation in any of the Canadian Jurisdictions.
### The Underlying Fund
[13] The Underlying Fund is, in the United States, a registered investment company under the Investment Company Act and a publicly offered mutual fund under the Investment Company Act.
[14] The Underlying Fund will not be managed by, or advised by, the Filer or an affiliate of the Filer.
[15] The requirements/industry standards relating to reporting, fund governance and investment restrictions in the U.S. applicable to the Underlying Fund are comparable to those in the Canadian regulations.
[16] The Underlying Fund will not hold more than 10% of its net asset value (NAV) in securities of another investment fund unless: (i) the Underlying Fund is a clone fund, as defined in NI 81-102, (ii) the other investment fund is a money market fund, as defined in NI 81-102, or (iii) securities of the other investment fund are index participation units (IPUs).
[17] The Fund will not pay sales fees or redemption fees in relation to its purchase or redemption of the securities of the Underlying Fund which to a reasonable person would duplicate a fee payable by an investor in the Fund.
[18] The Fund will not pay management or incentive fees which to a reasonable person would duplicate a fee payable by the Underlying Fund for the same service.
[19] Absent the Exemption Sought, an investment by the Fund in the Underlying Fund would:
a. be prohibited by paragraph 2.5(2)(a)(i) of NI 81-102 because the Underlying Fund is not subject to NI 81-102;
b. be prohibited by paragraph 2.5(2)(c) of NI 81-102 because the Underlying Fund is not a reporting issuer in any Canadian Jurisdiction; and
c. not qualify for the exception in paragraph 2.5(3)(a) of NI 81-102 because the securities of the Underlying Fund are not IPUs.
### The Benefits of the Fund Investing in the Underlying Fund
[20] An investment by the Fund in securities of the Underlying Fund will represent the business judgment of responsible persons uninfluenced by considerations other than the best interests of the Fund and will be made in accordance with the investment
minicounsel