The Portfolio Management Association of Canada (PMAC), through its Industry, Regulation & Tax Committee, is pleased to have the opportunity to provide the Mutual Fund Dealers Association of Canada (MFDA) with comments on the Discussion Paper on Expanding Cost Reporting (the Consultation). Capitalized terms used in this letter but not defined have the same meaning given to such terms in the Consultation.
As background, PMAC represents over 250 investment management firms registered with one or more members of the Canadian Securities Administrators (CSA) to do business in Canada as portfolio managers. In addition to this primary registration, the majority of members are dually registered as investment fund managers and/or exempt market dealers. PMAC members encompass both large and small firms managing total assets in excess of $1.8 trillion for institutional and private client portfolios.
PMAC advocates for the highest standard of unbiased portfolio management in the interest of the investors served by our members. In fact, that is PMAC’s mission statement: advancing standards. For this reason, we are consistently supportive of measures that elevate standards in the industry, improve investor protection, and promote transparency. PMAC applauds the MFDA’s leadership in proposing this Consultation on expanding cost reporting (Expanded Cost Reporting), as well as in devising examples of potential disclosure on this point. We believe that the Consultation formally launches an important discussion and is an acknowledgement of the gaps in cost disclosure that remain, even as a result of the implementation of CRM2.
Expanded cost reporting must extend to all investment products and services to be consistent and comparable – this disclosure is fundamental information for investors to enable a cost/benefit analysis. However, this information should bolster – and not detract from – clearly communicating to investors how and whether their portfolios are meeting their goals in alignment with their risk tolerances. Any proposed amendments that introduce only piecemeal or partial cost disclosure will be a disservice to all stakeholders, especially to Canadian investors.