Under National Instrument 81-102 Investment Fund, CBNK is classified as an “alternative mutual fund” and will use a nominal leverage of approximately 25% of its net asset value. CBNK will write covered call options and/or cash-covered put options on a portion of the assets in its portfolio to generate additional income in excess of dividends earned on equity securities in its portfolio.
According to the long-form prospectus for the fund filed by Mulvihill, CBNK can buy and hold almost all of its assets in common shares of banks to meet its investment goals.
It may also participate in securities lending transactions to generate additional income, provided that securities lending transactions are compliant with applicable Canadian securities regulations and are compatible with the Mulvihill ETF’s investment objectives and strategies.
CBNK is competing against enhanced ETF strategies that are also focused on the Canadian financial sector, including most recently Bank from Evolve Fund and HFIN from Hamilton ETF.
