filed a prospectus<\/a> today – the situation is\u00a0a little different. Issue expenses estimated to be $750,000 as well as the\u00a0selling commission of 4.25% of the total raised will be paid by the manager.<\/p>\nThey’re not doing this just for their health, of course. The manager will be getting a fee of 1.95% and will be compensated by the company for the service fee of 0.40% of the Capital Unit Value that they will pass on to the agents. And – just to make sure that everybody’s good and locked in – there’s a redemption fee payable to the MANAGER (not the company!) that starts a $1.05 per $20 unit (over 5%!) and declines until it is $0.55 per unit (still 2.75% of original investment!) in June 2013. Then it’s zero for the last six months of the fund’s life.<\/p>\n
Deferred Sales\u00a0Charges come to the split share world!<\/p>\n
Still – there won’t be that instant drop in NAV as soon as the Capital Units start trading! That will be meaningful to some.<\/p>\n
Unless hounded by vast crowds of importunate clients, I won’t be adding this\u00a0particular\u00a0split-share corporation preferred issue\u00a0to the HIMIPref\u2122 database. The fact that pref holders will only get their original $10 back on any redemptions means that even a small\u00a0increase in price will lead to a negative YTW and the YTW scenario will always be sufficiently short-term that the system won’t want to trade it.<\/p>\n
It would certainly be possible to improve the programme so that the disincentive for early redemptions was recognized … somehow … but until there are a lot of issues like this it hardly seems worth the effort.\u00a0I will be watching this issue with great, if informal, interest.\n<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
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