NEI to Merge Global Funds, Shifting Investor Strategy

TORONTO, ON – January 07, 2026 – NEI Investments has announced a significant proposal to streamline its global equity offerings by merging its NEI Global Growth Fund into the larger NEI Global Equity RS Fund. The move, which reflects a broader trend of consolidation within the Canadian asset management industry, is designed to simplify the firm’s product lineup but will also result in a notable shift in investment strategy and management for thousands of unitholders.

The proposed merger is subject to approval by the unitholders of the NEI Global Growth Fund at a special meeting scheduled for on or about March 25, 2026. If approved, the consolidation is expected to take effect around April 10, 2026. This action would also terminate the sub-advisory agreement with the well-known growth-focused manager, Baillie Gifford Overseas Limited, which currently manages the Global Growth Fund.

What the Merger Means for Investors

For investors in the NEI Global Growth Fund, the proposal represents a fundamental change to their investment. If the merger proceeds, they will automatically become unitholders in the NEI Global Equity RS Fund, a fund with a different performance history, fee structure, and underlying investment philosophy.

NEI Investments, which manages over $14 billion in assets, will mail a detailed notice and a management information circular (MIC) to affected unitholders of record around February 17, 2026. This critical document will outline the full details of the proposed transaction, including the rationale, the investment objectives of the continuing fund, and potential tax consequences. While many fund mergers in Canada are structured to be tax-deferred, the specifics will be crucial for unitholders to review with their financial and tax advisors.

The vote in March will be a pivotal moment. Unitholders will need to weigh the potential benefits of being part of a larger, better-performing fund against the change in investment management and strategy. The continuing NEI Global Equity RS Fund is a core part of NEI's responsible investing lineup, a key strategic focus for the firm.

A Tale of Two Funds

A closer look at the two funds reveals significant differences in performance, size, and strategy, underscoring the magnitude of the proposed change. The NEI Global Equity RS Fund is the larger and more established of the two, with approximately $587.7 million in assets under management as of September 30, 2025. In contrast, the NEI Global Growth Fund held about $159.7 million in assets as of March 31, 2025.

Performance data highlights a stark divergence. For the one-year period ending September 30, 2025, the NEI Global Equity RS Fund (Series A) delivered a return of 16.7%. Over the same period, the NEI Global Growth Fund (Series A) returned just 4.27%. The longer-term picture tells a similar story, with the Global Equity RS Fund showing stronger 10-year compounded returns across comparable series. Notably, the Global Growth Fund experienced a significant net asset value decrease of over 50% in the twelve months ending March 31, 2025, a period that was challenging for many growth-oriented strategies.

The investment approaches also differ. The NEI Global Equity RS Fund aims for long-term capital growth by investing in global companies with attractive valuations and strong or improving environmental, social, and governance (ESG) profiles. Its sub-advisor, Hermes Investment Management, employs a bottom-up stock selection process with a strict pricing discipline, creating a portfolio with a bias towards quality.

The NEI Global Growth Fund, especially since a strategy shift in late 2021, has been a vehicle for Canadian investors to access the distinct "Global Stewardship" strategy of its sub-advisor, Baillie Gifford. This approach is rooted in long-term, high-conviction growth investing, targeting innovative companies with significant potential for expansion, often with less emphasis on current valuation metrics.

The End of the Baillie Gifford Mandate

The termination of the sub-advisory relationship with Baillie Gifford is a key consequence of the merger. The Edinburgh-based manager is renowned for its aggressive, long-term growth philosophy, which has delivered spectacular returns in some funds but has also faced periods of sharp underperformance when market sentiment shifts away from high-growth stocks.

By merging the fund, NEI is effectively moving investors from Baillie Gifford's pure-growth style to the more balanced, quality-focused approach of the NEI Global Equity RS Fund. For unitholders who were specifically seeking exposure to Baillie Gifford's unique strategy, this represents a material change that will require them to re-evaluate whether the continuing fund aligns with their risk tolerance and investment objectives.

This change in management from Baillie Gifford to Hermes Investment Management will alter the portfolio's DNA. Top holdings in the NEI Global Growth Fund have included names like MercadoLibre and Taiwan Semiconductor, reflecting its global growth mandate. The NEI Global Equity RS Fund’s portfolio, while also global, is anchored by mega-cap quality names like NVIDIA, Microsoft, and Apple, reflecting its focus on established companies with strong fundamentals and ESG characteristics.

Consolidation as a Strategic Imperative

NEI's move is not happening in a vacuum. It is indicative of a powerful trend across the Canadian financial landscape, where asset managers are actively rationalizing their fund lineups. This consolidation is driven by a desire for greater operational efficiency, which can lead to economies of scale and potentially lower management expense ratios (MERs) for investors over time.

Furthermore, a streamlined product shelf offers greater clarity for both financial advisors and their clients, making it easier to construct portfolios and avoid product overlap. In a highly competitive market, firms are focusing their resources on their flagship funds and core competencies. For NEI, a firm that has built its brand on responsible investing, concentrating its global equity efforts into the NEI Global Equity RS Fund is a logical strategic step.

This move also aligns with the broader strategy of NEI's parent company, Aviso Wealth, which is focused on building a "technology-enabled, client-centric wealth management ecosystem." Simplifying investment offerings is a key part of creating a more seamless and understandable experience for the end investor. The merger allows NEI to present a clearer, more focused global equity solution that is fully integrated with its firm-wide commitment to ESG principles, a factor of increasing importance to a growing segment of the investing public.

As the date for the unitholder vote approaches, investors in the NEI Global Growth Fund will have a significant decision to make. They will need to carefully review the forthcoming information circular and consider whether the shift to a larger, more diversified, and quality-focused responsible investing fund is the right path for their long-term financial goals.