Popular BMO ETFs – Now Available as Mutual Funds
Advisors can now access some of our strategies as mutual funds: including the BMO Canadian Banks ETF Fund, the BMO Global Quality ETF Fund and the BMO Global Enhanced Income Fund.
June 2022
Unique New Strategies Built from Our ETF Suite
Our mission is simple—we aim to provide all Advisors with access to compelling investment strategies. We want you, and your clients, to feel confident in a product shelf that’s able to offer solutions for the full market cycle.
BMO Canadian Banks ETF Fund: A Simple Way to Access Canadian Bank Stocks
The BMO Canadian Banks ETF Fund is a one-ticket solution designed to provide a pure exposure to the “big six” Canadian banks. It can invest up to 100% of its assets into the BMO Equal Weight Banks Index ETF (Ticker: ZEB), giving you access to a basket of large cap Financials that are central to the Canadian economy. Sales Aid│ Reasons to Own Canadian Bank-Focused Mutual Funds
Fund Benefits
- Dividend Growth: All of the holdings have a long history of dividend payouts and raises.
- Size & Stability: The Canadian banking system is renowned for its stability, earnings and resiliency during an economic crisis.
- Equal Weight: The portfolio is allocated evenly to all six banks. Canadian Banks have generally rewarded investors over the long term with better returns than the broad Canadian equity market.1
- Cost Efficiency: Our professional management team executes buy and sell orders in bulk, which reduces trading costs relative to what an Advisor might spend if they built the portfolio themselves.
- Low-Cost Solution: F Series MER at 0.28% and Advisor Series MER at 1.41%. (Management Expense Ratio (MER) is estimated as Fund is less than one year old.)
Top Holdings*
Source: Morningstar Direct, as of April 30, 2022.
*BMO Canadian Banks ETF Fund uses the same investment strategy as BMO Equal Weight Banks Index ETF. The portfolio holdings are subject to change without notice. They are not recommendations to buy or sell any particular security.
Fund Codes
| Series | Fund Code | MER* |
|---|---|---|
| Advisor Series | BMO99262 | 1.41% |
| T6 | BMO34262 | 1.41% |
| Series F | BMO95262 | 0.28% |
| F6 | BMO36262 | 0.28% |
*Management Expense Ratio (MER) is estimated as Fund is less than one year old.
BMO Global Quality ETF Fund
The BMO Global Quality ETF Fund is a global equity mandate that seeks to invest in high-quality companies by allocating up to 100% of assets to the BMO MSCI All Country World Index ETF (Ticker: ZGQ). This fund selects securities that have sustainable competitive advantages to provide access to stable growth potential to investors. Sales Aid
Fund Benefits
- Financial Strength: Aims to identify quality growth stocks based on three criteria: high return on equity (ROE), stable year-over-year earnings growth and low financial leverage.
- Additional Upside: The focus on quality is intended to improve risk-adjusted returns over the longer term, earning investors a premium over the broad market.
- Portfolio Efficiency: Single-ticket access to a basket of high-quality global companies.
- Currency Exposure: Benefits from local currency appreciation.
- Low-Cost Solution: F Series MER at 0.51% and Advisor Series MER at 1.64%. (Management Expense Ratio (MER) is estimated as Fund is less than one year old.)
Sector Allocation
Geographic Allocation
Top Holdings
| Apple Inc | 6.21% |
| Microsoft Corp | 5.15% |
| Meta Platforms Inc - Class A | 3.41% |
| Nvidia Corp | 3.38% |
| Taiwan Semiconductor - SpAdr | 3.01% |
| Johnson & Johnson | 3.00% |
| Unitedhealth Group Inc | 2.65% |
| Alphabet Inc - Class A | 2.44% |
| Alphabet Inc - Class C | 2.36% |
| VISA Inc - Class A Shares | 2.33% |
Source: Morningstar Direct, as of April 30, 2022. The portfolio holdings are subject to change without notice and only represent a small percentage of portfolio holdings. They are not recommendations to buy or sell any particular security.
Fund Codes
| Series | Fund Code | MER* |
|---|---|---|
| Advisor Series | BMO99263 | 1.64% |
| T6 | BMO34263 | 1.64% |
| Series F | BMO95263 | 0.51% |
| F6 | BMO36263 | 0.51% |
*Management Expense Ratio (MER) is estimated as Fund is less than one year old.
BMO Global Enhanced Income Fund
The BMO Global Enhanced Income Fund uses a core and satellite approach, investing in BMO ETFs to provide a balance between higher yields relative to the broader market and upside participation. The portfolio is designed to provide stable monthly income from high-quality dividend assets, as well as from an options overlay that delivers “enhanced dividends.” Sales Aid
Fund Benefits
- Stable Monthly Cash Flow: The portfolio invests in ETFs that provide access to high dividend income.
- Adaptability in Changing Markets: By using covered calls, the fund is able to lower the impact of market movements and earn options premia.
- Upside Participation: The fund’s diversified portfolio composition of global equity ETFs provides the potential for long-term growth.
Core – High Level of Cash from Core Dividend Asset Classes
| Core Portfolio | % Fund | Yield |
|---|---|---|
| ZWG - BMO Global High Dividend Covered Call ETF | 30.0 | 6.9 |
| ZWC - BMO Canadian High Dividend Covered Call ETF | 15.0 | 6.0 |
| ZWS - BMO US High Dividend Covered Call Hedged to Cad ETF | 13.1 | 5.9 |
| ZWE - BMO Europe High Dividend Covered Call Hedged to Cad ETF | 5.6 | 6.3 |
| ZWT - BMO Covered Call Technology ETF | 3.8 | 5.3 |
| ZSP - BMO S&P 500 Index ETF | 7.5 | 1.3 |
Satellite – Ability to Adapt to Changing Market Conditions to Provide Additional Yield or Growth Potential
| Satellite | % Fund | Yield |
|---|---|---|
| ZWB - BMO Covered Call Canadian Banks ETF | 3.8 | 5.9 |
| ZWK - BMO Covered Call US Banks ETF | 3.8 | 6.5 |
| ZVC - BMO MSCI Canada Value Index ETF | 5.0 | 2.3 |
| ZUQ.F - BMO MSCI USA High Quality Index ETF | 8.8 | 1.0 |
| ZWU - BMO Covered Call Utilities ETF | 3.8 | 7.3 |
Source: Morningstar Direct, as of April 30, 2022. For illustration purposes only. Annualized Distribution Yield: The most recent regular distribution, or expected distribution, (excluding additional year end distributions) annualized for frequency, divided by current NAV. The portfolio holdings are subject to change without notice. They are not recommendations to buy or sell any particular security.
Fund Codes
| Series | Fund Code | MER* | Front End |
|---|---|---|---|
| Advisor Series | BMO99166 | 1.86% | BMO99166 |
| Series T6 | BMO34212 | 1.86% | BMO34212 |
| Series F (Fee Based) | BMO95166 | 0.73% | BMO95166 |
| Series F6 (Fee Based) | BMO36166 | 0.73% | BMO36166 |
*Management Expense Ratio (MER) is estimated, as Fund is less than one year old.
1 Source: Morningstar Direct. Based on returns from April 30, 2012 to April 30, 2022. Equal weight Canadian banks represented by BMO Equal Weight Banks Index ETF, broad Canadian equity market represented by the S&P/TSX Composite Total Return Index. Index returns do not reflect transactions costs or the deduction of other fees and expenses and it is not possible to invest directly in an Index. Past performance is not indicative of future results.
Advisor Use Only.
This communication is intended for informational purposes only and is not, and should not be construed as, investment and/or tax advice to any individual. Particular investments and/or trading strategies should be evaluated relative to each individual’s circumstances. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment.
The exchange traded funds or securities referred to herein are not sponsored, endorsed or promoted by MSCI, and MSCI bears no liability with respect to any such exchange traded funds or securities or any index on which such exchange traded funds or securities are based. The prospectus contains a more detailed description of the limited relationship MSCI has with BMO Asset Management Inc. and related exchange traded funds.
S&P 500® is a registered trademark of Standard & Poor’s Financial Services LLC (“S&P”) and “TSX” is a trademark of TSX Inc. These trademarks have been licensed for use by S&P Dow Jones Indices LLC and sublicensed to BMO Asset Management Inc. in connection with BMO S&P 500 Index ETF. ZSP is not sponsored, endorsed, sold or promoted by S&P Dow Jones LLC, S&P, TSX, or their respective affiliates and S&P Dow Jones Indices LLC, S&P, TSX and their affiliates make no representation regarding the advisability of trading or investing in such BMO ETF(s).
Commissions, management fees and expenses (if applicable) may be associated with investments in mutual funds and exchange traded funds (ETFs). Trailing commissions may be associated with investments in mutual funds. Please read the fund facts, ETF Facts or prospectus of the relevant mutual fund or ETF before investing. Mutual funds and ETFs are not guaranteed, their values change frequently and past performance may not be repeated.
For a summary of the risks of an investment in BMO Mutual Funds or BMO ETFs, please see the specific risks set out in the prospectus of the relevant mutual fund or ETF. BMO ETFs trade like stocks, fluctuate in market value and may trade at a discount to their net asset value, which may increase the risk of loss. Distributions are not guaranteed and are subject to change and/or elimination.
BMO Mutual Funds are offered by BMO Investments Inc., a financial services firm and separate entity from Bank of Montreal. BMO ETFs are managed and administered by BMO Asset Management Inc., an investment fund manager and portfolio manager and separate legal entity from Bank of Montreal.
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BMO ETFs are managed and administered by BMO Asset Management Inc., an investment fund manager and portfolio manager and separate legal entity from Bank of Montreal. Commissions, management fees and expenses all may be associated with investments in exchange traded funds. Please read the prospectus before investing.
Exchange traded funds are not guaranteed, their values change frequently and past performance may not be repeated.
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.
For a summary of the risks of an investment in the BMO Mutual Funds, please see the specific risks set out in the prospectus. ETF Series of the BMO Mutual Funds trade like stocks, fluctuate in market value and may trade at a discount to their net asset value, which may increase the risk of loss. Distributions are not guaranteed and are subject to change and/or elimination.
Distribution yields are calculated by using the most recent regular distribution, or expected distribution, (which may be based on income, dividends, return of capital, and option premiums, as applicable) and excluding additional year end distributions, and special reinvested distributions annualized for frequency, divided by current net asset value (NAV). Distributions are not guaranteed, may fluctuate and are subject to change and/or elimination. Distribution rates may change without notice (up or down) depending on market conditions and net asset value (NAV) fluctuations. The payment of distributions should not be confused with a BMO Mutual Fund’s performance, rate of return or yield. If distributions paid by a BMO Mutual Fund are greater than the performance of the investment fund, your original investment will shrink. Distributions paid as a result of capital gains realized by a BMO Mutual Fund, and income and dividends earned by a BMO Mutual Fund, are taxable in your hands in the year they are paid. Your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base goes below zero, you will have to pay capital gains tax on the amount below zero.
Distributions, if any, for all series of securities of a BMO Mutual Fund (other than ETF Series) are automatically reinvested in additional securities of the same series of the applicable BMO Mutual Fund, unless the securityholder elects in writing that they prefer to receive cash distributions. For further information, see the distribution policy for the applicable BMO Mutual Fund in the simplified prospectus.
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