Ethical Funds adopts flexible sales option

Ethical Funds Inc. is introducing an “optional load” structure for Ethical Funds and Credential Funds effective October 1, 2002, the company announced July 12. The move is designed to give investment dealers more flexibility to decide how Ethical Funds and Credential Funds are sold.

“Investment dealers frequently have asked Ethical Funds Inc. to provide them with a greater ability to tailor their compensation structure,” said Credential Group Vice President Marketing Margaret Yee. “Optional loads are one of the fairest ways to compensate dealers without impacting the investment returns of long-term mutual fund investors. The introduction of an optional load structure provides investment dealers with a high degree of flexibility in tailoring commission-based compensation.”

By providing incentives to dealers, the optional load structure is also calculated to expand the distribution network, and make it easier for Canadians to purchase socially responsible Ethical Funds and strategic asset allocation Credential Funds.

Investors who purchased units of Ethical Funds or Credential Funds before October 1, 2002 will not be affected. Their existing mutual fund units will continue to be treated as “no load” units.

"We think this is a positive development," said Eugene Ellmen, executive director of the Social Investment Organization in an interview with advisor.ca. "Ethical Funds' flexible approach to loads will make it easier for them to sell the product to more Canadians and to reach out to the advisor community."

Loads are commissions charged when mutual fund units are purchased or redeemed. A front-end load is levied on the purchase of mutual fund units. A back-end load (or deferred sales charge) is levied on the sale of mutual fund units. Back-end loads generally are in effect for six years. A low-load is like a back-end load, except that the deferred sales charge generally is in effect for two years. Starting October 1, 2002, Ethical Funds will be sold with optional loads, meaning that they can be sold with either a front-end, back-end, or a low-load. About 90 percent of equity-based mutual funds are sold with optional loads.

For more information, visit Ethical Finds Inc

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