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If you’re wondering about Bank of Montreal’s (BMO) mutual funds, we have put together some information for you. That being said, we can’t include all the information of BMO mutual funds and can only guarantee accuracy at the time of writing. To complete your homework, we recommend visiting BMO’s site to continue your research.
About Bank of Montreal (BMO) mutual funds
Featured Snippet: The Bank of Montreal was Canada’s first bank. It is a Canadian multinational financial services corporation and has been in business since 1817. Its head office is in Montreal, Québec. It currently offers over 100 mutual funds, as well as exchange-traded funds, managed portfolios and alternative products.
How do BMO mutual funds work?
BMO mutual funds (the same as any mutual fund) are a pooled investment product. Many investors buy small slices of the mutual fund. BMO mutual funds are bought and sold on the stock exchange, and the value can fluctuate. The fund manager, in this case BMO Management, uses the pooled money from the many investors to build a portfolio by buying underlying stocks, bonds and other investable assets.
Mutual fund portfolios (like BMO’s) are generally built based on investment goals and objectives, and earnings can include dividends, interest and capital gains. Some mutual funds are comprised of investments that track/replicate a stock index, and some mutual funds may include derivatives, futures, hedged funds and other high risk investments. That’s why it’s important to read the prospectus and fund facts before you invest in a mutual fund.
Mutual funds can be“actively managed”, which means the portfolio manager buys and sells underlying stocks, bonds and other investment products often to achieve the goals of the fund. Mutual funds can also be “passively managed”, which means the portfolio manager follows an index and seeks to replicate its returns. Passive funds often have “index” in the name of the fund. The main difference between actively and passively managed funds lies in the investment philosophy. Actively managed funds buy and sell underlying stocks to meet investment goals, whereas a manager of a passively managed fund buys the underlying stocks in the same proportion as the index it is following. Whether actively or passively managed, there are fees, charges and commissions associated with mutual funds that may reduce your investment returns and can vary, although index funds are typically less expensive. It’s wise to read the fund facts before you buy mutual funds. BMO offers both active and passive funds.
Examples of popular BMO mutual funds
All mutual funds, including the funds offered by BMO, fall into a few general categories: Money Market, Bond/Income, Balanced, Equity, Global and Other, including sector-specific and emerging markets. They have different levels of risk and different fees associated with them. In general, the higher the risk, the more potential for wide variations in the unit price and profit/loss. The mutual fund advisor will take the time to walk through some investment questions so that you can have a portfolio that you are comfortable with.
The chart below includes an example of both actively and passively managed funds, and the different categories of mutual funds. The data was compiled on July 2, 2020 by consulting the BMO fund pages. As mutual funds can fluctuate, the information may have changed. Please consult the fund pages for current information.
| Symbol | Mutual Fund Name | 3 year return | 5 year return | MER | Assets Under Management |
|---|---|---|---|---|---|
| BMO142 | BMO Money Market Fund | 0.53% | 0.56% | 1.15% | $637.2 million |
| BMO143 | BMO Bond Fund | 2.91% | 2.24% | 1.60% | $369.2 million |
| BMO145 | BMO Asset Allocation Fund | 2.09% | 2.85% | 2.12% | $1579.2 million |
| BMO95768 | BMO U.S. Equity Fund Series F-Hedged | 3.90% | N/A | 0.83% | $1182.46 million |
| BMO095718 | BMO Emerging Markets Fund | -2.36% | 2.72% | 1.13% | $633.01 million |
1. BMO Money Market Fund (BMO142)
AUM $637.2 million | MER 1.15% | 3 YR Return 0.53% | 5 YR Return 0.56%
The BMO Money Market Fund is intended to preserve capital and provide liquidity and interest income. There is a minimum initial investment of $500, and then additional contributions of $50.
2. BMO Bond Fund (BMO143)
AUM $369.2 million | MER 1.6%| 3 YR Return 2.91% | 5 YR Return 2.24%
The BMO Bond Fund invests in Treasury Bills, corporate and government bonds that mature in more than 1 year and is intended to provide interest income and some capital appreciation. It is considered low risk, and has a minimum initial investment of $500, and additional contributions of $50.
3. BMO Asset Allocation Fund (BMO145)
AUM $1579.2 million | MER 2.12%| 3 YR Return 2.09% | 5 YR Return 2.85%
The BMO Asset Allocation Fund provides a mix of equity and income. The portfolio manager buys and sells underlying stocks based on an investment strategy that looks at trends in interest rates and fundamental analysis. Risk is considered low-medium. The initial investment is $500, and additional contributions of $50.
4. BMO U.S. Equity Fund Series F-Hedged (BMO95768)
AUM $1182.46 million | MER .83%| 3 YR Return 3.9% | 5 YR Return N/A
Equity funds seek to achieve long-term capital appreciation by investing in high-quality equity securities that offer growth potential. F-series funds can only be purchased from fee-based advisors, so the MER tends to be lower.
The BMO U.S. Equity Fund Series F (Hedged), started in 2016, provides investors with access to the top companies in the U.S., including Facebook, Apple, Amazon, Netflix and Google (now Alphabet) (FAANG) as well as Microsoft, Proctor and Gamble and Merck. Equity funds tend to fluctuate more, and this is considered a medium risk. The initial investment is $500, and additional contributions of $50. This fund is “hedged” which means the fund manager will invest in products such as futures to reduce some of the volatility.
5. BMO Emerging Markets Fund (BMO095718)
AUM $633.01 million | MER 1.13% | 3 YR Return | 5 YR Return
The BMO Emerging Markets Fund, managed by LGM Investments Inc, a wholly-owned subsidiary of BMO, provides access to the emerging global markets by investing in companies such as foreign banks, energy and consumer staples in growing economies such as China, Taiwan and Malaysia. It is considered medium to high risk.
Examples of BMO mutual funds that pay dividends
BMO also has dividend-paying mutual funds that are less risky than an equity or global fund, but may produce better returns than a money market or a bond fund. For some funds, investors can automatically reinvest the dividends to purchase more units. The data was compiled on July 2, 2020 by consulting the BMO fund pages. Mutual funds can fluctuate, the information may have changed. Please consult the fund pages for current information.
1. BMO Dividend Fund (BMO146)
AUM: $5414.0 million | MER: 1.8% | 3 Yr Return 2.55% | 5 Yr Return 3.66%
The BMO Dividend Fund has a low-medium risk rating and focuses on established Canadian companies such as banks, energy companies and transportation companies. Established in 1994, this fund is one of the most popular and longest running funds.
2. BMO Global Dividend Fund (BMO725)
AUM $240.5 million | MER $2.45% | 3 YR Return 3.50% | 5 YR Return 4.44%
The BMO Global Dividend Fund invests in established companies in countries such as United States, Switzerland, Germany, Ireland and Canada. Top holdings include Microsoft, Apple, Nestles and Costco. It is managed by Guardian Capital LP Ltd, and is considered medium risk and seeks to grow portfolio value through capital gains and dividend income.
3. BMO North American Dividend Fund (BMO721)
AUM: $399.3 million | MER 2.53% | 3 YR Return .91% |5 YR Return 3.17%
Another fund established in 1994, the BMO North American Dividend Fund invests in financial institutions in the U.S. and Canada, as well as consumer staples, health care, IT and utilities. It is considered medium risk and invests in dividend-paying North American companies, as well as income trusts.
How to invest in BMO mutual funds
Step 1: Find a mutual fund advisor
You must purchase mutual funds through a licensed mutual fund advisor. BMO mutual funds are sold through a mutual fund advisor who is licensed in the province where you live. Not everyone in a bank branch is licensed to sell mutual funds and you usually need to make an appointment. Licensed employees who work for the bank are normally allowed to sell only the bank’s suite of mutual funds. You can learn more about mutual fund licensing and check if an advisor is licensed in Canada through the Canadian Securities Administrators.
Step 2: Determine your investment profile and goals
The mutual fund advisor will go over your investment concerns, goals and risk tolerance with you, and recommend funds that will suit your investment style best. They may recommend individual funds, or an investment portfolio that has been assembled to meet specific investment objectives. Remember, this is your money, and you can ask as many questions as you need to to understand what you are investing in.
Step 3: Begin investing
You can make a lump-sum contribution, or you can set up automatic monthly deposits from your bank account to your investment account. Many funds have a minimum amount required to begin investing, so always check the fund facts or ask the advisor. You can check your investment performance online, and you will receive statements quarterly, semi-annually or annually.
BMO gives you the option of opening a self-directed investment account that allows you to choose your own investments. You request the buys or sells you want to make, and they are processed through BMO. Depending on how much you are investing, BMO also offers you the option of Investorline, which provides personalized recommendations for an annual fee of $750 annual fee up to $100K, and .75% over $100K to a maximum annual fee of $3750. You must have a minimum account balance of $50,000. If you have a minimum of $1000, you can have your portfolio managed for you in a Smartfolio account. The fee is 0.7% annual up to $100K.
Any trading fees would be in addition to the fund fees and not all funds are eligible. Check the fund facts for eligibility.
BMO also offers index funds that try to replicate equity or bond indices. Index funds are considered “passive” investments, and typically have a lower MER. BMO also offers a full line of ETF funds.
Step 4: Keep your goals in mind
When you invest in mutual funds, the value on any given day can vary widely. depending on what the stock market has done. There can be large swings up and down, and it can sometimes seem like keeping your money in a coffee can in the backyard might be a better option, so it’s a good idea to keep your long term goals in mind. If you have concerns about what your funds are doing, you should be able to check with your advisor.
If you want to change your fund direction, or take money out, ask your advisor. Normally you can redeem your units (withdraw your money) from a mutual fund at any time, although it can take 2-3 days to process unless you have a Money Market fund, which is like a cash account.
The information on this page was compiled by Wealthsimple in July 2020. In order to uncover this information, we looked at BMO’s website, press releases and third-party sites.
A word of warning
Investors may lose some or all of their investment, and mutual fund accounts are not protected by the Canadian Deposit Insurance Corporation. Always read the fund facts and prospectus to understand what you are investing in, what level of risk is involved, and what fees and charges may be associated with the mutual fund. Please remember that all information provided here is general information and not intended to be advice. Past fund performance may not be indicative of future earnings.
Last Updated August 19, 2020
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