AGF announced today it will eliminate AGF RSP clone funds and RSP pools in the Harmony wrap program effective August 12.
The termination of the RSP clone funds is a result of the approval of Bill C-43, which allows unlimited foreign exposure in RSPs and other tax-deferred plans.
The clone funds will be terminated by distributing securities of the underlying fund or pool. Sales of the clone funds will be suspended as of close of business July 22, other than for reinvested distributions and fund reorganizations.
As an interim step, the process to unwind forward contracts in the RSP clone funds has begun, allowing direct investment in the underlying fund or pool.
As announced earlier, AGF will be paying to select clone funds an amount to reduce expenses from February 23, 2005, the date the federal budget was first tabled.
These funds are: AGF RSP Japan, AGF RSP World Balanced, AGF RSP World Companies, Harmony RSP U.S. Equity, Harmony RSP Balanced, Harmony RSP Maximum Growth, Harmony RSP Growth and Harmony RSP Growth Plus.
AGF says AGF RSP Global Bond Fund will remain in its current form. Unlike the clone funds, it does not incur incremental costs given its investment objective to hold foreign currency bonds from Canadian issuers.
Any penalty accruals for foreign content above the former limit will be discontinued and penalties withheld in 2005 will be refunded this month. AGF also discontinued foreign content rebalancing effective June 30.