Brompton Funds

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Objectives To provide unitholders with a stable stream of monthly distributions targeted at $0.125 per month ($1.50 per annum);

To mitigate the impact of significant interest rate increases on the net asset value of the portfolio;

To preserve the net asset value per unit; and

To enhance the total return per unit by actively managing the portfolio.

Distributions Click here to see the most recent distribution table.
Portfolio The Fund is invested in a portfolio of between 50 and 125 investment grade securities from 50 to 70 issuers comprised primarily of preferred securities and corporate bonds. The majority of the portfolio is invested in fixed income securities from the banking, financial services, insurance and utilities sectors (industries which have regulatory oversight).

Actively managed between corporate debt and preferred securities to take advantage of pricing anomalies and market inefficiencies. Preferred securities are not highly correlated with other asset classes resulting in improved diversification and potentially lower risk within an investment portfolio.

Rating Units of the Fund are rated P-2f by Standard & Poor's.
Safety Net Hedge The Safety Net Hedge is designed to mitigate the impact of significant, rapid increases in long-term interest rates on the net asset value of the portfolio while permitting it to appreciate when interest rates decline. This strategy allows for potential increases in distributions if interest rates rise significantly while keeping income relatively resistant to falling interest rates. Recent market conditions have reduced the effectiveness of the strategy as the correlation between the Fund's portfolio and U.S. Treasury bonds has declined substantially and an increase in market volatility has significantly increased the strategy's cost. Consequently, the safety net hedging strategy has been suspended.
Currency Hedge The portfolio will be hedged back to Canadian dollars to protect against currency risk.
Low Fees Management fee of 1.05% of net asset value per annum, which includes the fees payable to the Portfolio Manager.

2007 annualized management expense ratio of 1.53%
Manager Brompton Funds Management Limited
Portfolio Manager Flaherty & Crumrine Incorporated
Investment Approach
  1. Intensive credit analysis of current and potential portfolio holdings to identify those preferred and debt securities that provide optimal return characteristics relative to risk;
  2. Thorough analysis of securities’ terms and structure, with a preference for issues offering attractive, sustainable income over high current yields;
  3. Exploiting pricing inefficiencies within preferred and debt securities markets;
  4. Actively repositioning the portfolio both horizontally between issuers as well as vertically among issuers’ preferred and debt securities; and
  5. Consistent use of hedging strategies to help manage the interest rate risk while avoiding strategies that require anticipating the direction of interest rates.
Redemption Annually on the second last business day of November, provided units are tendered 20 business days prior. [Click here for more details]
Units may be redeemed annually at the option of the unitholder by tendering units of the Fund at least twenty business days prior to the second last business day of November ("Redemption Valuation Date"). Redemption of tendered units will be settled based on the net asset value per unit on the Redemption Valuation Date, less associated costs of the redemption, including brokerage costs. Units tendered for redemption will be redeemed effective the Redemption Valuation Date and will be settled on or before the tenth business day in December, subject to the Manager's right to suspend redemptions in certain circumstances. For the purpose of calculating the net asset value per unit, the value of the securities comprising the portfolio will be equal to the latest available bid price for such securities on the Redemption Valuation Date. >/div>
Leverage The Fund may borrow up to 35% of the total assets of the Fund to purchase additional securities to enhance the total return of the portfolio. In addition, the Fund may borrow up to 2.5% of its total assets for working capital purposes.
Service Fee 0.30% of NAV per annum is paid quarterly to Investment Advisors.
DRIP Investors may elect to reinvest their distributions and receive additional units of the Fund. Any units acquired pursuant to the distribution reinvestment program qualify for the service fee.
Eligibility Eligible for RRSPs, DPSPs, RRIFs and RESPs
Termination The Fund has no termination date. Investors may redeem their units at net asset value annually or sell their units in the market.
Issuer Bid/Market Purchases The Fund may purchase up to 10% per annum of its outstanding units at prices up to net asset value per unit.
Fair Investor Terms Strong corporate governance
Commitment to low fees and overall cost containment
No entrenched management provisions and a prohibition against dilutive equity offerings.
TSX Listing FFI.UN
CUSIP 33847Y103