IFIC responds to OSC’s proposal to improve retail investor access to long-term assets through investment fund product structures
Association supports the proposal but makes recommendations to enhance success and viability
February 21, 2025 (Toronto) – The Investment Funds Institute of Canada (IFIC) has made a submission to the Ontario Securities Commission (OSC) in response to their consultation paper which sets out a framework proposal to enhance opportunities for retail investors to access long-term illiquid assets (Long-Term Assets) through an investment fund product structure (the Proposal). As part of this initiative, the OSC proposes creating a new investment fund category, the Ontario Long-Term Fund (OLTF) to accommodate investments in Long-Term Assets.
“We commend the OSC for its proactive effort to enhance retail investors’ access to Long-Term Assets, where suitable, and foster capital formation and innovation in Ontario” said Andy Mitchell, President and CEO, IFIC. “We are also pleased with the OSC’s decision to base the Proposal on an investment fund structure but highlight several structural concerns for consideration to ensure the viability of OLTFs.”
While we support the Proposal’s overall objectives, in our submission we highlight the following key areas for consideration with recommendations to support the OSC’s development of the proposed rule amendments and policy changes in the next phase of this initiative:
- Prescriptive nature of the proposed OLTF structure: The proposed structure is unnecessarily complex and costly, therefore we recommend providing greater flexibility in how OLTF offerings can be structured and operated, in recognition of the expertise that investment fund managers and portfolio managers bring to their roles and the unique characteristics of each OLTF offering.
- Cornerstone Investor requirement: Eliminate the mandatory use of Cornerstone Investors but provide investment fund managers with the flexibility to include them in an OLTF if they believe that the Cornerstone Investor will be beneficial to the OLTF’s security holders.
- Potential issues impacting the viability of OLTFs: Evaluate issues that could have a negative impact on the proposed structure including limiting the market to Ontario, fund of fund purchase eligibility, registered plan eligibility, retail distribution, and financial reporting deadlines.
- Alternative considerations: Clarify if and what alternative approaches the OSC has considered to address issues with the proposed OLTF structure.
About Long-Term Assets
The OSC defines Long-Term Assets as illiquid assets that cannot be readily disposed of, may be difficult to value, and generally have longer investment time horizons than other assets. They include venture capital, private equity, private debt, mortgages, real estate, infrastructure, and natural resource projects.
About IFIC
The Investment Funds Institute of Canada is the voice of Canada’s investment funds industry. IFIC brings together approximately 150 organizations, including fund managers, dealers, professional and back-office service providers, to strengthen the integrity of the investment funds industry, foster public confidence in investment funds, and enable investors to achieve good outcomes. By connecting savers to Canada’s economy, our industry contributes significantly to Canadian economic growth and job creation.
For more information
Christine Harminc
Senior Manager, Communications and Public Affairs
charminc@sima-amvi.ca
416-309-2313
