Household account-linking/MFR and corporate class solutions
Manulife Private Investment Pools deliver everything you would expect from an investment program, including management fee reductions and tax efficiency. In addition, you can realize this value while continuing to work with the advisor you know and trust.
Realize added value with Household account-linking and Management Fee Reductions (MFRs)
Manulife Private Investment Pools help investors with significant assets realize more value. This exclusive program considers all of the investment accounts within your household and rewards you with a reduction in management fees. Here's how it works:
Household account-linking – A household balance is determined by combining and linking all of the assets of the pools held within your household. These accounts can include your spouse and other family members residing at the same address. It can also include corporate accounts where a household member beneficially owns more than 50 per cent of the corporation's voting shares.
Management Fee Reductions (MFRs) – If the total household balance invested in the pools exceeds $500,000, every account within the household benefits from a Management Fee Reduction as outlined below. MFR rates differ by pool type and only the pool assets that fall in each respective eligible tier receive the corresponding Management Fee Reduction. MFRs are paid in the form of a distribution/rebate and are automatically reinvested quarterly in additional units/shares and are not paid in cash.
Management fee reduction*
|Asset band tiers||$500K+ to $1M||$1M+ to $5M||$5M+|
|Equity Pools||5 basis points||10 basis points||15 basis points|
|Balanced Pools/Trusts||5 basis points||7.5 basis points||10 basis points|
|Fixed Income Pools/Trusts||2.5 basis points||5 basis points||5 basis points|
*Management Fee Reduction rates listed do not include applicable HST.
Corporate class solutions that reflect the needs of affluent investors
As an investor’s assets grow, tax efficiency becomes increasingly important. The Manulife Private Investment Pools are available as corporate class investments that offer valuable tax benefits for affluent investors.
Corporate class pools each offer a unique investment objective and strategy but together all the corporate classes are treated as a single legal and tax entity. This has the potential to enable investors with non-registered assets to increase tax savings or defer paying taxes, while improving their portfolio’s growth over time.
Corporate Class pools provide three distinct ways to help pay less or defer tax on your non-registered investments:
1. Tax-efficient growth/income
In a mutual fund corporation, income and expenses of each individual corporate class, including class pool is grouped together rather than being reported and taxed separately. This enables corporate class pools to share losses, expenses and loss carryforward amounts to reduce or defer taxable distributions generated by the corporation as a whole – this helps non-registered investors defer taxes and increase their investments’ growth. When corporate class distributions are made, they tend to be more tax efficient than distributions from traditional mutual fund trusts. This is because pools that are in corporate classes generally distribute ordinary Canadian dividends and capital gains dividends, both of which are taxed at a more favourable rate than fully taxable income such as interest or foreign income.
2. Tax-efficient rebalancing
Within a non-registered account, when investors switch from one mutual fund trust to another, they will be taxed on any realized capital gains from the taxable switch. With corporate class pools, however, the investor can switch between any two corporate class pools without realizing any capital gains. This is because all of the class pools are held within the same corporation.
3. Tax-efficient cash flow using Series T
The pools can be purchased as Series T shares for those investors who would like to receive a regular monthly cash flow*, which generally consists of return of capital (ROC), from their investments. The ROC is tax-free and it will lower the adjusted cost base (ACB) of the class pool shares. Once all of the investor’s capital has been returned, subsequent ROC cash flows will be treated as capital gains and taxed at a favourable rate.