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First Trust Portfolios Canada has announced that its board of directors has approved a proposal to merge the First Trust AlphaDEX Canadian Dividend ETF (TSX: FDY) into the First Trust Canadian Capital Strength ETF (TSX: FST).

A special meeting of unitholders of FDY will be held on 20 September 2017.

According to First Trust, the merger, which will see FST become the continuing fund, should provide investors in FDY with several benefits, including greater market exposure, greater liquidity and the ability to harvest existing tax losses.

While both funds provide exposure to Canadian equities, FST offers a broader investment universe as opposed to just dividend paying equities as targeted by FDY. First Trust believes that the Canadian equity market continues to represent an attractive investment opportunity for investors.

FST also has a larger asset base then FDY; therefore, the merger of FDY and FST will provide unitholders of FDY with a much larger market capitalization and the primary and secondary market for units of FST is expected to be more liquid.

FST has existing capital and non-capital tax losses that will carry forward and continue to be available to the continuing fund, which may benefit all unitholders of the combined fund.

A special meeting of unitholders of FDY will be held on 20 September 2017 to consider and vote upon the proposal.