Episode Summary

This episode pulls back the curtain on the extensive regulatory guardrails designed to protect Canadian mutual fund investors, focusing on National Instrument 81-102 (NI 81-102). Under this strict regulatory framework, prospectus-qualified mutual funds are bound to rigorous structural safety standards, including concentration limits that prevent a fund from over-allocating capital to a single company, strict caps on borrowing, limits on holding illiquid assets, and tight restrictions on the use of derivatives. We contrast these diversified, heavily policed products with exempt market funds, which bypass the prospectus system entirely and are exempt from these protective portfolio boundaries. To bridge the gap between complex regulatory filings and retail investors, Canadian regulators spent  ...