The Managed Return Fund, which performs like a bond fund, but is taxed like an equity fund, completes the range of asset classes available under Mackenzie’s Capital Class switch fund structure, according to a media release from the company.
Canadian retirement savers can move their assets in their non-registered Mackenzie Capital Class portfolio to more conservative asset classes – without worrying about an immediate tax liability or switching costs.
Instead of interest income, the Mackenzie Managed Return Capital Class Fund generates capital gains for investors, which it distributes quarterly, providing tax relief for non-registered investors.
Although 100% of bond interest income is taxable at the full marginal rate, only 50% of any capital gains are added to an investor’s taxable income.
The fund will be exposed to North American debt returns through the use of derivative and direct bond investments, with 10% of the portfolio in equities.
There are currently 37 Capital Class Funds, including
the Mackenzie Managed Yield Capital Class fund, a money
market-substitute that, like the new Managed Return fund,
generates capital gains for investors.