Northwest & Ethical Investments L.P. (Re), 2025 CanLII 114281

November 3, 2025

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF NORTHWEST & ETHICAL INVESTMENTS L.P.

(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer on behalf of conventional and alternative mutual funds it currently manages that are subject to National Instrument 81-102 Investment Funds (NI 81-102) (the Existing Funds) and any conventional and/or alternative mutual funds that are subject to NI 81-102 that the Filer or an affiliate of the Filer may manage in the future (the Future Funds, and together with the Existing Funds, each a Fund and collectively, the Funds) for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that grants relief from the requirements set out in paragraphs 15.3(4)(c) and 15.3(4)(f) of NI 81-102, which provide that a sales communication must not refer to a performance rating or ranking of a mutual fund or asset allocation service unless:

(a) the rating or ranking is provided for each period for which standard performance data is required to be given, except the period since the inception of the mutual fund; and

(b) the rating or ranking is to the same calendar month end that is:

(i) not more than 45 days before the date of the appearance or use of the advertisement in which it is included, and

(ii) not more than three months before the date of first publication of any other sales communication in which it is included,

in order to permit the LSEG Lipper Awards and LSEG Lipper Leader Ratings (each as defined below) to be referenced in sales communications relating to the Funds (together, 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 subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon by the Funds in each of the other provinces and territories of Canada (together with the Jurisdiction, the Jurisdictions).

Interpretation

Unless otherwise defined, terms in this decision have the respective meanings given to them in NI 81-102, National Instrument 14-101 Definitions, and MI 11-102.

Representations

The decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a limited partnership formed under the laws of Ontario which acts through its general partner, Northwest & Ethical Investments Inc., a corporation formed under the laws of Canada, with its head office in Toronto, Ontario.

2. The Filer is registered as (i) a portfolio manager in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec and Saskatchewan; (ii) an exempt market dealer in Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, Prince Edward Island, Québec and Saskatchewan; and (iii) an investment fund manager in British Columbia, Newfoundland and Labrador, Ontario and Québec.

3. The Filer, or an affiliate of the Filer, is, or will be, the manager, portfolio manager and/or trustee of each of the Funds.

4. Neither the Filer nor the Existing Funds are in default of securities legislation in any of the Jurisdictions.

The Funds

5. Each Fund is, or will be, established under the laws of Ontario or Canada as a mutual fund that is a trust or a class of shares of a mutual fund corporation and is, or will be, a reporting issuer in one or more of the Jurisdictions.

6. The Funds are, or will be, governed by the provisions of NI 81-102, subject to any exemption therefrom that has been, or may be, granted by the applicable securities regulatory authorities.

7. The securities of the Funds are, or will be, qualified for distribution in one or more of the Jurisdictions pursuant to a simplified prospectus and fund facts documents prepared and filed in accordance with the securities legislation of such Jurisdictions.

LSEG Lipper Leader Ratings and LSEG Lipper Awards

8. LSEG Lipper, Inc. (Lipper) is not a member of the Funds’ organization. Lipper is a "mutual fund rating entity" as defined in NI 81-102. Lipper is part of the London Stock Exchange Group, plc group of companies (LSEG) and is a global leader in mutual fund performance research, providing premium data, fund ratings, analytical tools and global commentary through specialized product offerings. Lipper's fund data and analysis, fund awards designations and ratings information provide valuable insight to advisors, media and individual investors.

9. The Filer wishes to include in sales communications of the Funds references to LSEG Lipper Leader Ratings and LSEG Lipper Awards (as each defined below), where such Funds have received an LSEG Lipper Leader Rating and/or an LSEG Lipper Award from Lipper.

10. One of Lipper’s programs is the LSEG Lipper Fund Awards (the LSEG Lipper Awards). This program recognizes investment funds that have excelled in delivering consistently strong risk-adjusted performance relative to peers and acknowledges fund families with high average scores for all investment funds within a particular asset class or overall. Currently, the LSEG Lipper Awards take place in approximately 24 countries.

11. In Canada, the LSEG Lipper Awards include the LSEG Lipper Fund Awards and LSEG Lipper ETF Awards. For the LSEG Lipper Fund Awards and the LSEG Lipper ETF Awards, Lipper designates award-winning funds in several individual fund classifications for three, five and ten-year periods.

12. The categories for fund classification used by Lipper for the LSEG Lipper Awards in respect of Canadian funds are those maintained by the Canadian Investment Funds Standards Committee (CIFSC) (or a successor to CIFSC), a Canadian organization that is independent of Lipper. Only those CIFSC groups of ten or more unique funds will claim an LSEG Lipper Fund Award, and only those CIFSC groups of five or more unique ETFs (each of whom have a minimum of three or five years of performance history, as applicable) will claim an LSEG Lipper ETF Award.

13. The LSEG Lipper Awards are based on a proprietary rating methodology prepared by Lipper, known as the LSEG Lipper Leader Rating System. The LSEG Lipper Leader Rating System is a toolkit that uses investor-centred criteria to deliver a simple, clear description of a fund's success in meeting certain goals, such as preserving capital, lowering expenses or building wealth. These ratings provide an instant measure of a fund's success against a specific set of key metrics and can be useful to investors in identifying funds that meet particular characteristics.

14. In Canada, the LSEG Lipper Leader Rating System includes LSEG Lipper Ratings for Consistent Return (reflecting funds' historical risk-adjusted returns relative to funds in the same classification), LSEG Lipper Ratings for Total Return (reflecting funds' historical total return performance relative to funds in the same classification), LSEG Lipper Ratings for Preservation (reflecting funds' historical loss avoidance relative to other funds in the same classification) and LSEG Lipper Ratings for Expense (reflecting funds' expense minimization relative to funds with similar load structures) (collectively, the LSEG Lipper Leader Ratings). LSEG Lipper Leader Ratings are performance ratings or rankings for investment funds issued by Lipper. In each case, the categories for fund classification used by Lipper for the LSEG Lipper Leader Ratings are those maintained by CIFSC (or a successor to CIFSC). LSEG Lipper Leader Ratings are measured monthly over 36, 60 and 120-month periods, and an overall rating is also measured, which is an unweighted average of the previous three periods. The highest 20% of funds in each category are named LSEG Lipper Leaders for that particular rating and receive a score of 5, the next 20% receive a score of 4, the middle 20% are scored 3, the next 20% are scored 2 and the lowest 20% are scored 1.

15. The LSEG Lipper Awards, awarded annually in Canada, are based on the LSEG Lipper Ratings for Consistent Return measure, which, as generally described above, is a risk-adjusted mutual fund return performance measure used by Lipper that considers both short and long-term risk-adjusted performance relative to fund classification, together with a measure of a fund's consistency. In respect of the LSEG Lipper Awards for Canada, the LSEG Lipper Ratings for Consistent Return are measured over the 36, 60 and 120-month periods ending at the end of July of each year. As described above, the highest 20% of funds in each classification are named LSEG Lipper Leaders for Consistent Return, and the highest LSEG Lipper Leader for Consistent Return in each applicable fund classification over these periods wins a LSEG Lipper Award.

Reasons for Relief

16. The LSEG Lipper Leader Ratings are performance ratings or rankings under NI 81-102 and LSEG Lipper Awards may be considered performance ratings or rankings under NI 81-102 given that the awards are based on the LSEG Lipper Leader Ratings as described above. Therefore, references to LSEG Lipper Leader Ratings and LSEG Lipper Awards in sales communications relating to the Funds need to meet the applicable requirements in Part 15 of NI 81-102.

17. In Canada and elsewhere, LSEG Lipper Leader Ratings are calculated only for 36, 60 and 120-month periods and are not calculated for a one-year period. This means that a sales communication referencing a LSEG Lipper Leader Rating cannot comply with the "matching" requirement contained in paragraph 15.3(4)(c) of NI 81-102 because a rating is not available for the one-year period.

18. Additionally, a sales communication referencing the overall LSEG Lipper Leader Ratings and the LSEG Lipper Awards, which are based on the LSEG Lipper Leader Ratings, must disclose the corresponding LSEG Lipper Leader Rating for each period for which standard performance data is required to be given. Since a rating for the one-year period is not available for the LSEG Lipper Leader Ratings, sales communications referencing the overall LSEG Lipper Leader Ratings or LSEG Lipper Awards also cannot comply with the "matching" requirement contained in paragraph 15.3(4)(c) of NI 81-102.

19. The exemption in subsection 15.3(4.1) of NI 81-102 for references to overall ratings or rankings of funds cannot be relied upon to reference the overall LSEG Lipper Leader Ratings or LSEG Lipper Awards in sales communications for the Funds because subsection 15.3(4.1) of NI 81-102 is available only if a sales communication otherwise complies with the requirements of subsection 15.3(4) of NI 81-102. As noted, sales communications referencing the overall LSEG Lipper Leader Ratings or LSEG Lipper Awards cannot comply with the "matching" requirement in subsection 15.3(4) of NI 81-102 because the underlying LSEG Lipper Leader Ratings are not available for the one-year period, rendering the exemption in subsection 15.3(4.1) of NI 81-102 unavailable.

20. Paragraph 15.3(4)(f) of NI 81-102 imposes certain restrictions on disclosure in sales communications. The paragraph provides that for a rating or ranking such as a LSEG Lipper Award to be used in an advertisement, the advertisement must be published within 45 days of the calendar month end to which the rating or ranking applies. Further, for the rating or ranking to be used in any other sales communication, the rating or ranking must be published within three months of the calendar month end to which the rating or ranking applies.

21. Because the evaluation of funds for the LSEG Lipper Awards will be based on data aggregated until the end of July in any given year and the results will be published in November of that year, by the time a fund receives an award in November, paragraph 15.3(4)(f) of NI 81-102 will prohibit it from publishing news of the award altogether.

22. The Exemption Sought is required for the LSEG Lipper Leader Ratings and LSEG Lipper Awards to be referenced in sales communications relating to the Funds.

23. The LSEG Lipper Leader Ratings and LSEG Lipper Awards are important tools for investors, as they provide them with context when evaluating investment choices.

24. The LSEG Lipper Leader Ratings and LSEG Lipper Awards provide an objective, transparent and quantitative measure of performance that is based on the expertise of Lipper in fund analysis and alleviates any concern that references to them may be misleading and therefore, contrary to paragraph 15.2(1)(a) of NI 81-102.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted to permit the LSEG Lipper Awards and LSEG Lipper Leader Ratings to be referenced in sales communications relating to a Fund provided that:

1. The sales communication that refers to the LSEG Lipper Awards or LSEG Lipper Leader Ratings complies with Part 15 of NI 81-102, other than as set out herein, and contains the following disclosure in at least 10-point type:

(a) the name of the category for which the Fund has received the LSEG Lipper Award and/or LSEG Lipper Leader Rating;

(b) the number of mutual funds in the category for the applicable period;

(c) the name of the ranking entity, LSEG Lipper, Inc.;

(d) the length of period and ending date, or the first day of the period and ending date, on which the LSEG Lipper Award and/or LSEG Lipper Leader Rating is based;

(e) where an LSEG Lipper Leader Rating is referenced, a statement that LSEG Lipper Leader Ratings are subject to change every month;

(f) in the case of a LSEG Lipper Award, a brief overview of the LSEG Lipper Award;

(g) in the case of a LSEG Lipper Leader Rating (other than LSEG Lipper Leader Ratings referenced in connection with a LSEG Lipper Award), a brief overview of the LSEG Lipper Leader Rating;

(h) where LSEG Lipper Awards are referenced, the corresponding LSEG Lipper Leader Rating that the LSEG Lipper Award is derived from is presented for each period for which standard performance data is required other than the one-year and since inception periods;

(i) where a LSEG Lipper Leader Rating is referenced, the LSEG Lipper Leader Ratings will be presented for each period for which standard performance data is required other than the one-year and since inception periods;

(j) where a LSEG Lipper Leader Rating is referenced, disclosure of the meaning of the LSEG Lipper Leader Rating from 1 to 5 (e.g. rating of 5 indicates a fund is in the top 20% of its category); and

(k) reference to Lipper's website for greater detail on the LSEG Lipper Awards and LSEG Lipper Leader Ratings, which includes the rating methodology prepared by Lipper.

2. A LSEG Lipper Award referenced is not awarded more than 365 days before the date of the sales communication.

3. A LSEG Lipper Award and LSEG Lipper Leader Rating referenced is calculated based on comparisons of performance of mutual funds within a specified category established by the CIFSC (or a successor to the CIFSC).

“Darren McKall”

Darren McKall

Associate Vice President, Investment Management Division

Ontario Securities Commission

Application #2025/0603

SEDAR+ Project #6346278