BMO Strategic Equity Yield Fund – Biweekly Update
December 6, 2024
Duy Le
CFA, Portfolio Manager, BMO Global Asset Management
Portfolio Manager Commentary
The BMO Strategic Equity Yield Fund (SEYF) has a NAV of $9.77 as of December 3, 2024. The average coupon is between 10.00% and 10.50% and the average protection within the Fund is between 75.00% and 80.00%. Nineteen exposures (~$66.5mm CAD) were called month-to-date and the called notional was reinvested into new exposures. In terms of regional allocation, the Fund currently sits at 69.91% invested into Canadian exposures, 25.48% invested in U.S. exposures, and 4.61% invested in European exposures. Canadian Banks (26.58%), Canadian broad-based indices (15.25%), and U.S. broad-based indices (14.04%) represent the three largest exposures within the Fund.
November came to an end with a fresh record set on the S&P500 index and the best monthly return of 2024 thus far. The Portfolio Managers (PMs) sentiment for U.S. equities remains positive despite bearishness across the rest of the world. Coming out of the U.S. election, U.S. and Canadian equity markets saw very good returns on optimism of pro- growth policies from the incoming administration with the expected tax cuts and deregulation. In addition, recent economic data coming out of the U.S. shows the continued strength of the U.S. economy, marked by a low unemployment rate, strong labour market, robust consumer spending, and good GDP growth.
Given the strength of the U.S. economy, the PMs of the Fund have a bias towards U.S. exposures and have continued to increase the Fund’s allocation to U.S. underlyings over the past several weeks.
Fund Snapshot
| Average Coupon | Average Buffer Level |
|---|---|
| 10.00-10.50% | 20%-25% |
Distributions
| Previous | Upcoming |
|---|---|
| November 18, 2024 | December 16, 2024 |
Fund Characteristics
| Series | Fund Codes | MER (%)* |
|---|---|---|
| Advisor (CAD) | BMO99290 | 1.74 |
| F (CAD) | BMO95290 | 0.70 |
| **Low to Medium risk rating by prospectus. |
Top 10 Trades
| Reference asset | Annualized Coupon | % of overall fund | Distance to Protection | Distance to Call (Positive is in the money) |
|---|---|---|---|---|
| Canadian Banks | 10.30% | 1.97% | 22.59% | 2.59% |
| Canadian Banks | 9.10% | 1.97% | 22.59% | 2.59% |
| Canadian Market | 10.00% | 1.60% | 21.44% | 1.44% |
| US Banks | 9.97% | 1.48% | 18.82% | -1.18% |
| US Market | 9.06% | 1.48% | 22.45% | 2.45% |
| Canadian Market | 10.44% | 1.48% | 20.79% | 0.79% |
| US Banks | 10.74% | 1.48% | 21.70% | 1.70% |
| Canadian Banks | 10.50% | 1.48% | 21.58% | 1.58% |
| US Market | 9.00% | 1.48% | 19.08% | -0.92% |
| Canadian Insurance | 9.10% | 1.48% | 23.01% | 3.01% |
Source: BMO GAM December 3, 2024.
Reference Asset Exposure and Regional Exposure3
3Reference Asset and Regional Exposure refer to the underlying benchmark exposure from the Total Return Swaps held by the Fund. Source BMO GAM December 3, 2024. Holdings are subject to change without notice.
Disclaimer
The BMO Strategic Equity Yield Fund will focus on replicating exposure to notes focused on income generation, while also maintaining contingent downside protection. Our dedicated team of structured product professionals seeks to achieve above market returns and exposure to North American and/or global equity markets through the use of derivatives and/or structured products.
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BMO Mutual Funds are managed by BMO Investments Inc., which is an investment fund manager and a separate legal entity from Bank of Montreal.
Commissions, trailing commissions (if applicable), management fees and expenses all may be associated with mutual fund investments. Please read the ETF facts, fund facts or prospectus of the relevant mutual fund before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
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