CRA rules on the addition of FX-hedged units to a mutual fund

An open-end mutual fund trust will add a "hedged" class of units, whose performance will not be affected by fluctuations in the Canadian dollar relative to the currencies of the underlying foreign securities of the fund due to the allocation of gains or losses on forward currency contracts strictly to the hedged class.

CRA ruled that this addition will not result in a disposition of the existing units, a resettlement of the fund or the application of s. 104(7.1).

Neal Armstrong.  Summary of 2014 Ruling 2014-0518521R3 under s. 104(7.1).