S&P/TSE 60 Index Participation Units

 Investors losing a Bay Street bargain [Globe&Mail, 07Oct99] While the MER of i60s (XIUs) will increase to triple that of the TIPs they replace, it's still a great bargain. Also the TSE confirms "the conversion to i60s from TIPs 35s and 100s will be done in a way that won't trigger capital gains."

 [28Sep99] Barclays Global Investors launches S&P/TSE 60 index participation units. Here are the Barclays press release, TSE press release on the proposed merger of TIPs and HIPs into i60s and the official iUnit website.

In December 1998, the Toronto Stock Exchange in conjunction with Standard and Poors announced a new index, the S&P/TSE 60. This basket of 60 stocks is intended to be more representative of Canada's economy and so provide a better benchmark for passive investors.

At the same time the TSE announced its intention to introduce a new Index Participation Unit based on the S&P/TSE 60. This instrument (to be called SIPs?) will eventually supplant the existing TIPs 35 and TIPs 100 (also called HIPs) IPUs.

While there has been a lot coverage in the press about the new S&P/TSE 60 index and the corresponding Index Participation Units some important questions have not been answered. As a result Bylo recently queried the TSE about when the S&P/TSE 60 IPUs would become available and about the tax implications for owners of TIPs and HIPs. One of their representatives was kind enough to respond within hours.

Extract from an e-mail exchange between Bylo and info@tse.com on 18Dec98:

When will the S&P/TSE 60 based IPUs be launched?

S+P and the TSE have not decided this yet. All that I can say is in the future within 2 years. As of now no new units have been created based on the new index.

Where can I find the prospectus. There is nothing in SEDAR.

Not yet.

How will owners of TIPs 35 and TIPs 100 be affected?

They will have their existing units phased into the new fund.

What are the tax implications of the transition to the new TIPs 60 IPUs? Will Revenue Canada deem this to be a disposition, i.e. a crystallisation of capital gains (or losses)?

I cannot answer this yet.

Related Background Material

New TSE index to debut by yearend [National Post, 18Nov98]

New Canadian benchmark has strong resource bias [National Post, 02Dec98]

What will happen to TIPS 35 and TIPS 100 when the Toronto 60 index introduces an index participation unit (IPU) along the lines of TIPS? Eric Kirzner suggests three possibilities.
Phasing of TIPs to IPUs should be seamless [National Post, 07Dec98]
Hopes S&P/TSE 60 will lift Canadian returns [National Post, 19Apr99]
S&P/TSE 60 units are good news [National Post, 28Jun99]
S&P/TSE 60 update [National Post, 30Aug99]

S&P/TSE 60 General Information [Standard & Poors]

S&P/TSE 60 Current Quotes [Directions]