TORONTO, March 28, 2016 /CNW/ - Franklin Templeton Investments Corp. today acknowledged significant policy changes resulting from the 2016 Canadian federal government's budget proposal on March 22 and implications for mutual fund investors.
Change to Corporate "Rollover" Rules for Mutual Fund Corporations
Notably, it was announced that corporate "rollover" rules, which allow an individual investor in one class of shares of a mutual fund corporation to switch to another class in the corporation without triggering a capital gain or loss, will change. As proposed, effective October 1, 2016, exchanges of shares between different classes of a mutual fund corporation will be treated as a disposition at fair market value, triggering a capital gain or loss for the investor at the time of the switch. Accordingly, after October 1, switches between share classes of Franklin Templeton Corporate Class Ltd. (Corporate Class-structured funds) will no longer benefit from tax-deferred treatment.
"A number of the fundamentals of the Trudeau government's first budget were well telegraphed, however, the elimination of tax-deferred exchanges between share classes of mutual fund corporations – including Franklin Templeton's Corporate Class-structured funds – caught the Canadian investment industry by surprise," said Duane Green, managing director, Canada, for Franklin Templeton Investments Corp.
At the current time, there are no immediate tax consequences for exchanges between Corporate Class-structured funds, nor are there any restrictions in place at Franklin Templeton with regard to purchasing or switching into these funds, but investors should be aware of these impending changes and take them into account when making any investment decisions. Investors are encouraged to speak to their investment advisor about these changes and their options.
Franklin Templeton will continue to monitor the situation closely and work with industry groups and other stakeholders to better understand the full impact that this change will have on mutual fund investors, and to seek to mitigate that impact, where possible. Further updates will be provided as more details on the proposal emerge.
Comments on Budget from Franklin Templeton Solutions
Separately, Stephen Lingard, senior vice president and portfolio manager for Franklin Templeton Solutions*, which manages the C$9 billion Franklin Quotential Portfolios, recently released a commentary on the budget proposal from his investment viewpoint. In this brief recording, Stephen offers his views on the budget's potential impact on Canada's growth.
About Franklin Templeton Investments
Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management to retail, institutional and sovereign wealth clients in over 180 countries. Through specialized teams, the company has expertise across all asset classes—including equity, fixed income, alternative and custom solutions. The company's more than 600 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With offices in 35 countries, the California–based company has more than 65 years of investment experience and approximately US$714 billion (C$966 billion) in assets under management as of February 29, 2016.
For more information, please visit franklintempleton.ca or connect with Franklin Templeton on Twitter (@FTI_Global) and read the Beyond Bulls & Bears blog featuring perspectives from Franklin Templeton investment professionals around the world.
*Franklin Templeton Solutions (FTS) is a global team dedicated to global portfolio based solutions, which draws on the expertise of a number of Franklin Templeton affiliates. In Canada, the advisor to the Canadian FTS mandates is Fiduciary Trust Company of Canada, a wholly owned subsidiary of Franklin Templeton Investments Corp.
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SOURCE Franklin Templeton Investments Corp.
For further information: Media Contact: Amie Lauder, Corporate Communications - Canada, Franklin Templeton Investments, (416) 957-6560, [email protected]